Pequot’s Arthur Samberg Settles With SEC For $28 mln

Connecticut-based hedge fund Pequot Capital Management, Inc., and its Chairman and CEO Arthur Samberg agreed to a $28 million settlement with the Securities and Exchange Commission over charges that the hedge fund engaged in insider trading in Microsoft Corp. (MSFT) securities, according to the SEC on Thursday.

SEC: “The SEC’s complaint against Pequot and Samberg, filed in U.S. District Court in Connecticut, 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.

According to the SEC’s complaint, Zilkha then conveyed to Samberg his understanding that Microsoft would meet or beat its earnings estimates. 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.”

Pequot and Samberg agreed to settle the SEC’s charges without admitting or denying the SEC’s allegations against them.

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