Byron R. Wien, the chief investment strategist of Pequot Capital Management, is known for his list of “10 Surprises” at the beginning of every year. One event he didn’t predict in this year’s list: that his own firm would be forced to shut down.
On Monday, Mr. Wien penned a swan song of sorts for his business partner and fellow hedge fund guru Arthur J. Samberg, the founder of Pequot. Mr. Samberg was forced to close what was once the largest hedge fund in the business in May after regulators reopened a long-simmering investigation into insider trading at the firm.
Mr. Wien, who joined Pequot in December 2005 after two decades as Morgan Stanley’s chief strategist, wrote about Mr. Samberg’s dream to continue the firm he started in 1986 long past his retirement. He blames the reopening of the Securities and Exchange Commission’s investigation for leading, in large part, for shattering that vision.
“I will never believe he has done anything wrong,” Mr. Wien wrote in the letter. “It’s too bad that Art’s dream of a firm that continued after him was not realized because it was the right dream and he was the right guy to make it happen. That is the real tragedy of what has taken place.”
Mr. Samberg withstood a high-profile investigation by the S.E.C. and the Department of Justice in 2006, which focused on Pequot’s trades in Microsoft securities. The probe was reopened last year after revelations surfaced that Mr. Samberg had paid $2.1 million to a
former Microsoft employee, David Zilkha, in 2007. Mr. Zilkha had worked briefly for Pequot six years earlier. The payment came to light recently during Mr. Zilkha’s divorce proceedings.
Mr. Samberg has maintained all along that his firm did nothing wrong, but said the public nature of the investigation had turned away clients and made it difficult for him to run the business.
The announcement of Pequot’s liquidation in May, just a few weeks after the firm had signed a 10-year lease for a new office building in Connecticut, fueled speculation that regulators were about to officially charge Mr. Samberg of criminal wrongdoing.
But no charges have been announced so far, and people briefed on the matter told DealBook that Mr. Samberg has not received a so-called Wells notice from the S.E.C., a
notification that the agency intends to recommend enforcement proceedings.
