Samberg to close Pequot Capital

Arthur J. Samberg, founder, chairman and CEO of hedge fund manager Pequot Capital Management, today told clients he will shutter the firm, close its core funds and spin out two funds into separate businesses, according to a client letter obtained by Crain’s Pensions & Investments.

Pequot managed about $3.5 billion, according to the firm’s SEC ADV form.

Mr. Samberg said he’s closing the firm because of “adverse publicity” resulting from an ongoing investigation into possible insider trading that the SEC and the U.S. Attorney began in 2001. The case was closed in 2006 without charges being brought, but it was reopened last year, Mr. Samberg said in the client letter.

“Public disclosures about the continuing investigation have cast a cloud over the firm and have become a source of personal distraction. With the situation increasingly untenable for the firm and for me, I have concluded that Pequot can no longer stay in business as an investment adviser. I know this news may come as a surprise to you, but I am convinced it is the right decision for all concerned,” Mr. Samberg said in his letter.

The firm’s core funds will be fully liquidated by year-end, with most of the cash being returned to investors by June 30, according to the letter.

Michael J. Corasaniti, managing director, will be in charge of a new firm that will manage the Matawin Fund. Rob Webster and Paul Mellinger, co-portfolio managers and managing directors, will head a company managing the Special Opportunities Fund. Further details were not available.

Jonathan Gasthalter, a Pequot spokesman, declined to comment. Mr. Samberg couldn’t be reached for comment.