October 07, 2006
Pequot Capital Escapes Charges
Pequot Capital Management Inc. can breathe a sigh of relief now. The Securities and Exchange Commission may have decided not pursue insider trading charges against $7 billion hedge fund. In the SEC spotlight were the firm, its management team, and former chairman John J. Mack. Regulators had been investigating a probable tip-off from Mack to Pequot officials five years back. This was in relation to a looming merger between General Electric Capital Corp. and Heller Financial Inc.
While the authorities have not formally closed the investigation, it would end soon, Pequot officials believe. Pequot’s investigation may have been part of the SEC’s regulation drive. The agency has been investigating the trading practices of several hedge funds for some time now. Washingtonpost.com reports:
SEC enforcement chief Linda Chatman Thomsen told the Senate Judiciary Committee last week that insider trading by hedge funds is "an area of significant concern to the commission." Thomsen testified that the agency had brought five such cases against hedge funds or their advisers in the fiscal year that ended last week. But without e-mails, documents or an outright admission by someone involved in a case, insider trading charges can be difficult for regulators to prove.
Read more: Hedge Fund Escapes Charges
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