Pequot Capital and Art Samberg pay $28 million to settle Insider Trading Charges with SEC

May 31st, 2010
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Pequot Capital Management and its CEO Art Samberg have reached a settlement agreement with the Securities and Exchange Commission. Pequot Capital Management and Samberg settled without admitting or denying the insider trading allegations that had been made against them. The insider trading charges that were levied against the once renowned hedge fund manager have led the firm to wind down its hedge funds and cease operations. As part of the settlement, Pequot Capital and Samberg will pay nearly “$18 million in disgorgement of trading profits and prejudgment interest as well as $10 million in penalties.” According the SEC, as part of the agreement, Art Samberg has also agreed to not associate with any investment advisers in the future.

The SEC also continues to pursue enforcement action against David Zilkha, a former Microsoft Corporation (MSFT) and Pequot Capital employee, who allegedly fed nonpublic information about MSFT to Art Samberg. The SEC's complaint “alleges that amid rumors in April 2001 that Microsoft would miss its earnings estimates for the quarter that had just ended, Samberg sought information from Zilkha, a Microsoft employee who had just accepted an offer from Samberg to work at Pequot. Zilkha quickly reached out to a Microsoft colleague, who sent him an e-mail stating that the company would meet or beat its earnings estimates for the quarter…Samberg thereafter traded in Microsoft on behalf of funds managed by Pequot. On April 19, after the market had closed, Microsoft announced that it beat its earnings estimates, driving up the price of Microsoft's stock. As a result of the illegal trading by Pequot and Samberg, the Pequot funds made more than $14 million.”

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For Detailed Investor Profiles on these Investors, click below:
Pequot Capital Management*
Related People: Art Samberg; Dan Benton*
Related Entities: Dawson-Herman Capital Management*; Pangaea Capital Management; Pequot Capital Core Fund*; Pequot Matawin Hedge Fund; Pequot Special Opportunities; Willow Creek Capital*
Related Article Tags: Hedge Fund Fraud and Ponzi Scheme News

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