Top hedge fund will close

BOSTON: Arthur Samberg, once the world's biggest hedge-fund manager, said a federal insider-trading investigation is forcing him to shut Pequot Capital Management Inc more than two decades after starting its first fund.

"With the situation increasingly untenable for the firm and for me, I have concluded that Pequot can no longer stay in business," Samberg wrote in a letter to clients yesterday. Pequot oversees $3.47 billion, according to a May 15 regulatory filing, down from $4.3 billion in November and $15 billion in 2001, when it was the top-ranked hedge-fund firm by assets.

The US 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. That was about a year after the agency told Samberg and Morgan Stanley CEO John Mack they wouldn't be accused of wrongdoing related to insider trading.