For Immediate Release


Keith Rutter
Phone: 202-347-1122

SEC Describes Possible Criminal Activity In Major Unprosecuted Hedge Fund Case

WASHINGTON - 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

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:


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"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

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.


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The Project On Government Oversight (POGO) is an independent nonprofit that investigates and exposes corruption and other misconduct in order to achieve a more effective, accountable, open and honest federal government.

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