Did huge hedge fund make big profit on Microsoft inside information?

If you thought the SEC missed a chance to crack down on Bernie Madoff's $65 billion Ponzi scheme, you won't be surprised to learn that it let a much smaller scam go on for years. That's right folks, if the fine reporting at the Boston Globe is to be believed, the now-closing $15 billion Pequot Capital Management -- whose head, Art Samberg, was a member of Barron's round-table of stock pickers -- allegedly made $12 million by trading on insider information it bought from someone at Microsoft (MSFT) a few years ago.

This is not the first Pequot insider trading investigation that the SEC bungled. As I posted, back in July 2006, the SEC fired a lawyer who wanted to depose current Morgan Stanley (MS) CEO John Mack to examine whether he spilled the beans about General Electric's (GE) 2001 acquisition of Heller Financial on which Pequot allegedly made an $18 million profit. The SEC investigator, Gary Aguirre, was fired after receiving a glowing performance review -- allegedly because he didn't back down from his efforts to depose Mack after his SEC bosses told him to.