Pequot Capital Liquidation

Pequot Capital will begin liquidation of its core funds and start returning cash to investors
as it prepares to bring its business to a halt in the next few months.

Arthur Samberg's Pequot Capital Management Inc. is liquidating its core hedge fund as a result of an ongoing investigation into posible insider trading, according to a letter to investors obtained by The Wall Street Journal.

Even though Samberg has never been changed, the company has been unable to overcome the bad publicity resulting from the investigations. "Those agencies closed their investigations in 2006 without bringing any charges, but Pequot nonetheless suffered from adverse publicity," Samberg wrote in the letter, which was sent to investors on Wednesday. "Public disclosures about the continuing investigation have cast a cloud over the firm."

The Securities and Exchange Commission has been examining whether Pequot traded Microsoft Corp. shares on confidential information provided by a former employee. Even though the SEC closed the case over two years ago, it was re-opened amid after new information surfaced late last year showing payments Pequot made to a key witness.

The Pequot Partners Fund has generated net annualized returns of 10.1 percent over the past five years and 1.8 percent in 2009 through April 30 vs. the S&P’s declines of 2.7 percent and 2.5 percent, respectively," Samberg wrote. "I am enormously proud of Pequot’s long-term track record."

Makes you wonder how proud he is of the companies achievement, or simply how proud he is to close shop and not have to give an explanation.