Stock exchange monitors referred Pequot Capital Management to the Securities and Exchange Commission for possible securities violations, including insider trading, at least 45 times between 2005 and this year, the commission has revealed in a letter to the US Congress.
The SEC is probing allegations that Arthur Samberg, the hedge fund’s chairman, received privileged information from a Microsoft employee in 2001 and used it to generate profits of $14m. The SEC has not filed any charges against anyone in the case.
An earlier Pequot investigation was shut down in 2006 and became the subject of Senate hearings chaired by Charles Grassley, Republican Senator, who asked for the SEC letter with the referral information, which he released on Monday.
Gary Aguirre, a former SEC employee who worked on the first inquiry, has claimed he was fired for pursuing powerful Wall Street figures.
The Pequot investigation was reopened in January after information surfaced that appeared to suggest Mr Samberg had obtained private information ahead of Microsoft’s April 2001 earnings announcement from David Zilkha, a Microsoft employee who was about to join Pequot.
Mr Samberg told investors in May he was winding down Pequot’s business because “the continuing investigation [has] cast a cloud over the firm and [has] become a source of personal distraction”. The group has spun off several units but Mr Samberg is not involved with them.
A spokesman for Mr Samberg and the original Pequot declined to comment, as did the SEC.
The 45 referrals mentioning Pequot occurred over four years during which the hedge fund engaged in more than 300,000 trades. The two main US stock exchange monitors make a total of roughly 330 referrals a year to the SEC, their spokesmen said.
Mary Schapiro, SEC chairman, also said in the letter to Mr Grassley that the SEC was working to improve its system for analysing tips and referrals.
“For years, I’ve urged the SEC to change its culture and step up enforcement. If it’s turning the corner culturally, better automated systems to show . . . potential problems at individual firms will help enforcement,” Mr Grassley said.
Separately, Finra, the industry group that regulates brokers, fined Credit Suisse $275,000 for failing to post independent stock research on its website, as required by the 2003 research analyst settlement, which expired last month.
The bank declined to comment.
Get alerts on Financial services when a new story is published