IT IS hard to tell whether we stepped in a scandal or not, but putting the evidence out there is almost certainly worthwhile. Last night we wrote about Pequot's inside trading that involved Microsoft shares. This was not the first time that we wrote about the Pequot fiasco [1, 2, 3].
I know some of you wondered if SCO had given up and faced reality and wasn't going to file. Hah! Nevah happen. The full title of the document is "SCO's Reply Memorandum in Support of Its Renewed Motion for Judgment as a Matter of Law or, in the Alternative, for a New Trial".
VSpring Capital (SCO) Vector Capital (SCO) IDG Ventures (Broadmark) Group Atlantic Partners, LLC (Broadmark) Paladin Capital Group (Broadmark) Pequot Capital (Broadmark) Technology Crossover Ventures (Broadmark) Ram Capital Resources, LLC (Impact Capital) Crestview Capital Fund (Impact Capital)
The U.S. Securities and Exchange Commission in January resumed a probe into whether Samberg’s funds illegally profited in 2001 by trading on inside information about Microsoft Corp., people familiar with the matter said at the time. That was about a year after the agency told Samberg and Morgan Stanley Chief Executive Officer John Mack they wouldn’t be accused of wrongdoing related to insider trading.
Fried, Frank, Harris, Shriver & Jacobson and Wachtell, Lipton, Rosen & Katz played key roles brokering a $28 million settlement that resolves a long-simmering allegation that Pequot Capital Management, the Westport-based hedge fund, committed insider trading in Microsoft securities in 2001, according to SEC officials.
The SEC filed suit against Pequot and its chairman, Arthur Samberg, today and announced at the same time that Pequot and Samberg agreed to pay $28 million combined in disgorged profits and penalties to settle the case. (They did not admit or deny guilt.) Federal investigators had been looking into the allegations since at least 2005 but closed early investigations after failing to find enough evidence to bring a case, according to our prior reporting. But then something happened that didn't help Pequot: The employee at the center of the case got divorced, and e-mails implicating the employee, David Zilkha, in the insider trading scheme came to light in filings. Zilkha joined Pequot in 2001 after working for Microsoft, and he used his contacts at Microsoft to tip Pequot to the fact that Microsoft was about to release a better-than-expected earnings report in the spring of 2001. Pequot then made $14 million on trades of Microsoft securities, according to the SEC's complaint.
Feds Charge Two In Insider-Trading Plot Involving Disney
Wowza. Folks out at Disney’s HQ in Burbank, Calif., are probably doing a bit of glassy-eyed headshaking on Wednesday, in wake of a criminal complaint filed a few hours ago.
The complaint, filed by federal prosecutors in Manhattan, has alleged that a former administrative assistant to Disney’s head of communications and her boyfriend tried to sell advance access to the company’s second-quarter earnings reports. Click here for the WSJ story; here for the criminal complaint.
--Dan Gillmor, San Jose Mercury