A US Senate report has criticised the Securities and Exchange Commission's insider trading investigation of Pequot Capital Management, a US hedge fund manager, finding evidence the SEC had shied away from thoroughly grilling John Mack for fear of his political clout.

The report, prepared by the minority staff of the US Senate Committee on Finance, said: "The investigation of Pequot Capital Management could have been an ideal opportunity for the SEC to develop expertise in the operations of a major hedge fund while deterring institutional insider trading. The SEC squandered this opportunity."