Senators Demand Answers About Pequot Payments

Dec 12 2008 | 2:10am ET

Two of the lawmakers most critical of the Securities and Exchange Commission’s handling of the insider trading probe of Pequot Capital Management have seized on the revelation that the firm agreed to pay a former employee questioned in the investigation $2.1 million.

Sens. Charles Grassley (R-Iowa) and Arlen Specter (R-Pa.) are demanding answers from the Connecticut hedge fund, which was cleared of wrongdoing in the controversial SEC probe. In a letter to Pequot chief Arthur Samberg on Wednesday, they asked him to turn over “all records” related to the payments to former analyst David Zilkha and “a narrative explaining their purpose.”

“In order to avoid any appearance that the payments were related to either the SEC or the Senate investigations,” Samberg was asked by the Senators to furnish “correspondence and responsive records” by Dec. 17. The payments to Zilkha, who worked for Pequot for just a few months in 2001, were disclosed as part of his divorce proceedings.

The SEC and Federal Bureau of Investigation looked into possible insider-trading of Microsoft shares by Pequot in 2005 as part of a wider investigation of insider-trading at Pequot. Zilkha worked for Microsoft before joining Pequot, and the SEC probe uncovered several e-mails in which Samberg pressed Zilkha for information about the software giant. Both investigations ended without any charges being filed against Pequot or Samberg.

The senators’ query has already succeeded in prying the first statement and skeletal explanation of the payments from Pequot.

“The payments made to David Zilkha are pursuant to the settlement of a civil claim related to his employment and termination by Pequot that was first presented to the firm in January 2007 and after all investigations had been closed,” a Pequot spokesman told Bloomberg News. He said the hedge fund was cooperating with Grassley and Specter.


In Depth

'Smart Beta' Funds In Regulators' Sights, Hedgies May Be Next

Mar 26 2015 | 11:11am ET

Funds that mimic strategies used by active managers for a fraction of the cost could...

Lifestyle

Study: Both Marriage and Divorce Lead to Negative Hedge Fund Performance

Mar 25 2015 | 6:51pm ET

Trouble at home leads to trouble in the market for fund managers, according to researchers...

Guest Contributor

Concerned About Your HFT Exposure? Hedge It!

Mar 26 2015 | 1:06pm ET

High-frequency trading has been a persistent storyline for several years. The trading...

 

Sponsored Content

    Mar 9 2015 | 6:35am ET

    Kelly RodriquesKelly RodriquesAs more investors look to diversify, many are beginning to use retirement funds to invest in alternative assets such as private equity and real estate. Kelly Rodriques, CEO & President of PENSCO Trust Company, explains how companies can connect with those looking to use their retirement accounts in a different way. Read more…

Editor's Note