The SEC sent a "Wells notice" to Mr. Samberg and the firm about six weeks ago indicating it is prepared to bring charges, a person familiar with the matter said. The Securities and Exchange Commission is prepared to file insider-trading charges against Pequot Capital Management and its founder, Arthur Samberg, over Pequot's 2001 trading in Microsoft Corp. stock, according to a letter Pequot sent to investors.
In a response to the Wells notice, filed about a month ago, Mr. Samberg and Pequot argued that the trades weren't based on material, nonpublic information, this person said. Mr. Samberg, 68 years old, is expected to fight the charges. Spokesmen for the SEC and Pequot declined to comment. Mr. Samberg, whose firm racked up impressive returns over the decades, abruptly announced in late May that he was closing the firm amid the investigation.
Pequot once oversaw $15 billion, but investors pulled away amid the regulatory scrutiny. Mr. Samberg said the situation led him conclude "that Pequot can no longer stay in business." As part of firm's winding-down, Mr. Samberg told investors in letter dated Aug. 10 about the Wells notice he and the firm received. The development shouldn't slow Pequot's liquidation, which has already started, the firm said.
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