George S. May Business Blog

Samberg, Pequot Capital shuts down after S.E.C. reopens 3 year old investigation

On the heels of an investigation launched by the S.E.C., news has emerged that Arthur Samberg’s Pequot Capital Management Inc. will be shutting down. The Wall Street Journal reported today that they received a letter from Samberg that, while denying any foul play, the S.E.C. investigation has “cast a cloud over the firm” and in turn they will begin liquidation.

In brief, the investigation alleges that Pequot may have traded Microsoft Corp. shares on confidential information provided by a former employee of the computer company who was later hired by Pequot.

You may, or may not, remember hearing Samberg and Pequot’s name in the news a while back as the investigation was actually a few years back. However, in the last 6 months, the S.E.C. unveiled new information that showed a key witness received payments from the company and reopened the investigation once again.

The documents, which emerged in a divorce proceeding, showed that Pequot began paying $2.1 million to former Microsoft employee David Zilkha in mid-2007. The initial $700,000 payment was made around the time Sen. Charles Grassley, R-Iowa, and Arlen Specter, R-Pa., were urging the SEC to reopen the case.

Zilkha received a second $700,000 payment last year and was slated to receive the same amount this year.

A Pequot spokesman has said the payments were related to the settlement of a civil claim concerning Zilkha’s employment and termination.

The S.E.C. has declined to comment thus far.

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