WASHINGTON - December 23 - The Obama administration has said it will aggressively go after Wall Street criminals, but is the government letting two prominent defendants off easy in a Microsoft insider trading case?

Last month, according to transcripts uncovered by the Project On Government Oversight, the Securities and Exchange Commission (SEC) leveled new accusations of possible criminal wrongdoing in a major insider trading case. The case involves Pequot Capital Management, once the largest hedge fund in the world, and alleged insider trading in the shares of software giant Microsoft. 

Yet  neither  defendant, former Pequot chairman Arthur Samberg and  former Pequot employee David Zilkha, have been charged with any crime. There is little indication that the Department of Justice (DOJ) intends to follow-up with a criminal prosecution.

"You have to question the government's commitment to holding big Wall Street players accountable when no criminal charges have been brought in this case, despite the SEC's dramatic accusations," said Danielle Brian, POGO's executive director.

Added Senator Charles Grassley, slated to be the top Republican on the Senate Judiciary Committee:

"The Department of Justice owes the public an explanation for why there have been no criminal prosecutions despite the SEC openly making accusations of a witness being bought off."

"The public has a huge interest in the case, congressional hearings were held, and the SEC has now characterized the payments as 'hush money'.  So where is the Justice Department?"

According to transcripts of a previously unreported administrative proceeding held in New York in November, SEC lawyers said  Samberg,  the former hedge fund chairman, agreed to pay $2.1 million in "essentially hush money to  prevent Mr. Zilkha from exposing this insider trading scheme."  

Last May, Samberg settled insider trading charges with the SEC for $28 million,  and admitted no wrongdoing. A representative of  Samberg and Pequot offered no comment on the latest allegations. Zilkha is contesting the SEC's case and has denied all charges. 

The SEC  further alleged  that   Zilkha  engaged in  "deception" by having "concealed" evidence from FBI agents and SEC investigators in the insider trading case.  Zilka has denied those accusations as well.