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June 22, 2006

Pequot Allegedly Under Investigation

The N.Y. Times is reporting late tonight that Art Samberg's $7-billion Pequot Capital Management hedge fund is under investigation for "possible insider trading". It's messy stuff, with allegations of political interference with a prior SEC investigation, an internal SEC lawyer/investigator's unusual termination, plus Pequot profits from some very well-timed pre-buyout trades.

This could be very messy, and alongside the dubious and shit-disturbing Senate Judical Committee meeting on June 28 to look at "short-selling activities of hedge funds", is certain to start another cycle of Regulate the Hedge Funds.

[Update] It seems that the Senate Judiciary folks have changed the name of the meeting, but hedge funds are still central.

[Update^2] A Pequot statement is out in which the fund denies all wrongdoing, saying, "It is outrageous that the New York Times would print a front page story based on the unfounded allegations of a terminated SEC employee, and unsupported by any evidence."


As a short-selling aside, my skeptical friend Herb Greenberg now has a (very green) blog over at Marketwatch. Herb's one of my favorite guys, and our gossipy lunches at Il Fornaio here in San Diego are always great fun.

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