Arthur Samberg, founder of Pequot Capital Management, has decided to liquidate the firm’s core hedge fund, according to a letter to investors obtai
Arthur Samberg, founder of Pequot Capital Management, has decided to liquidate the firm’s core hedge fund, according to a letter to investors obtained by The Wall Street Journal.
The decision comes in the midst of an SEC investigation into potential insider trading at the firm involving Microsoft shares, and a former employee of the computer company who was later hired by Pequot.
The Westport, Connecticut-based investment firm has denied any wrongdoing, but according to the Wall Street Journal, Samberg’s letter, sent to investors late Wednesday, claims that the SEC investigation has “cast a cloud over the firm” and become a “personal distraction”.
“With the situation increasingly untenable for the firm and for me, I have concluded that Pequot can no longer stay in business as an investment adviser,” Arthur Samberg wrote. “Public disclosures about the continuing investigation have cast a cloud over the firm and have become a source of personal distraction.”
According to the letter obtained by The Journal, Pequot plans is to spin out its Matawin and Special Opportunities funds, while liquidating its core funds, including the Pequot Partners Fund, which, Samberg noted in the letter, had generated a net annualized return of 1.8 per cent this year to 30 April.
The SEC originally closed the investigation into Pequot two years ago but reopened its investigation after new information surfaced in a divorce proceeding last year showing Pequot had allegedly made payments to a key witness.
A Pequot spokesman has said the payments to former Microsoft employee David Zilkha – who received USD700,000 last year and was due to receive the same figure again this year – were related to the settlement of a civil claim concerning his employment and termination.
According to the Wall Street Journal, Pequot now manages about USD3bn in assets, down from its peak of USD15bn.
