Eight years and nine investigations after certain trades that occurred in 2001, the SEC has finally sued hedge fund manager Pequot Capital Management and its Chairman and CEO, Arthur Samberg, with insider trading in Microsoft securities. The SEC also brought an action against the alleged tipper, David Zilkha.

Enforcement Director Robert Khuzami stated that the cases had "two particularly troubling aspects — a hedge fund manager trading on illegal insider information, and his tipper source who withheld crucial information about the scheme during an SEC investigation. Both are high-priority targets for SEC Enforcement."

The SEC alleges that in April 2001 Samberg sought information from Zilkha, a Microsoft employee who had just accepted an offer from Samberg to work at Pequot, as to whether Microsoft would meet or beat its earnings estimates for the quarter. Zilkha allegedly reached out to his former Microsoft colleagues and then conveyed to Samberg his understanding that Microsoft would, in fact, meet or beat its earnings estimates. Based on this knowledge, Samberg allegedly traded in Microsoft on behalf of funds managed by Pequot, and made profits of more than $14 million.

Prior to today's case, the trades noted above set in motion motion nine(!) investigations by entities including the SEC’s Division of Enforcement (twice), the Senate Finance and Judiciary Committee (twice), the SEC’s Inspector General (twice), an SEC Initiating Official (reviewing the SEC’s Inspector General’s disciplinary recommendations), the FBI, and prosecutors in the SDNY. (See the full list of nine here).