Samberg: Pequot Capital is Finished

In a stunning turn involving one of the hedge fund world's brightest stars, Arthur Samberg announced that he's winding down his shop -- Pequot Capital Management. Media reports have been flying fast and furious all day following the airing of a letter, first obtained by the Wall Street Journal. In it, Samberg, 68, told investors that an ongoing Securities and Exchange Commission investigation has made it "untenable for the firm and for me" to stay open.

After 2001, the SEC began looking into allegations that Pequot traded on insider information involving shares of Microsoft. The investigation was closed in 2006, only to reopen in 2008 following the surfacing of new evidence. Documents showed that David Zilkha, a former employee of the software company later hired by Pequot, was on pace to make $2.1 million in total payments from Pequot after the closing of the initial investigation.

Samberg's letter explained that Pequot's core funds will be liquidated and the bulk of that money will be returned to investors by June 30. Meanwhile, two other funds -- Matawin and Special Opportunities -- will be spun out under different leadership by the end of the year. Details on the moves are forthcoming. ...