At last, a bit of good news for the beleaguered hedge fund industry. One of its number, Connecticut-based Pequot Capital, is not corrupt, writes Andrew Clark in New York.
Pequot, named after a native American tribe, is a quirky operator which boasts a basketball court built into its trading floor. It has more than $7bn (3.73bn pounds) under management.
In June, a former SEC investigator, Gary Aguirre, went public with claims that he had been fired for looking into Pequot's trades a little too hard.
Aguirre had tried to subpoena John Mack, a former Pequot chairman who now runs Morgan Stanley and has powerful political connections - he was a donor to the Bush campaign. Approaching such a prominent individual, claims Aguirre, was enough to get him the sack.
Aguirre's claims prompted a congressional inquiry and a renewed SEC inquiry into Pequot. Now it seems that the SEC has decided no action is necessary.
In a letter to clients this week, Pequot's founder, Art Samberg, said the agency "is not going to recommend any enforcement action be taken against Pequot or any of its employees in connection with the insider trading investigation".
Itís a rum affair and nothing much about it is clear - in fact, it's about as transparent as Pequot Capital itself, which has an absurdly uninformative website consisting of a four-sentence description of its business and an email address.
Aguirre claimed he had prima facie evidence of insider trading by Pequot. Briefly feted as a courageous seeker of truth, he appears to have been hung out to dry like an old dishrag.
The hedge fund industry is having a rough old time of it. One of Pequot's competitors, Amaranth Advisers, last month revealed it had lost a staggering $6bn in a week by placing huge bets on a rise in the price of natural gas.
Several hundred funds have apparently shut down in recent months, crippled by unfavourable movements in derivative markets. Others, including London's GLG Partners, have been spending a lot of time explaining their affairs to a sceptical taxman.
Hedge funds are notoriously opaque. But they seem to have a dangerous allure to rich people not unlike the appeal of page boys to gay congressmen.
Those who invest in hedge funds generally know the risks. But human nature being what it is, the nosier of us would like to know just what goes in inside them. How about an independent counsel to investigate?
There's an obvious candidate to lead a special inquiry - step forward the recently unemployed Gary Aguirre.
