One of the mysteries of the SEC's case against Arthur Samberg and his Pequot hedge fund is the identity of Mr. Samberg's "friend" who benefited from a stock recommendation Mr. Samberg made on the basis of what the SEC says was inside information. The SEC complaint says, "at Samberg's recommendation, a friend of Samberg's purchased 300,000 shares of Microsoft stock." The complaint goes on, "the friend of Samberg's who had purchased Microsoft shares at Samberg's recommendation on April 19 had gains of $372,060."
This is one of the paradoxes of inside information. The SEC brought charges against Mr. Samberg, but not against the "friend," who the agency didn't even name. It's as if the message being sent by the regulators is that it's okay to profit from inside information, as long as you get it secondhand rather than firsthand.
I haven't seen the "friend" mentioned in any of the press coverage today.
It's entirely possible that the friend didn't know the basis of Mr. Samberg's recommendation, or that he or she did his or her own research on Microsoft before acting on the tip, or that the friend received many tips from Mr. Samberg and decided independently which ones to act on and which ones to disgregard. MSFT was trading at around $68 a share in this period, so the "friend" who bought 300,000 shares must have had $20 million available to deploy on the basis of stock tips from friends. It's a relatively small group of people who fall into that category.