Updated: Sat., Jul. 24, 2010, 6:34 AM
$1M bounty for hedge whistleblowers
Last Updated: 6:34 AM, July 24, 2010
Posted: 1:43 AM, July 24, 2010
A Connecticut couple has been awarded a record $1 million for information that led to an insider-trading settlement against a prominent hedge-fund adviser and civil proceedings against the wife’s ex-husband.
The Securities and Exchange Commission said yesterday that Glen and Karen Kaiser discovered key evidence that helped the agency reach an agreement for Pequot Capital Management and its chief executive, Arthur Samberg (pictured), to pay $28 million to settle fraud charges over trades in Microsoft shares.
The $1 million award to the Kaisers is a record for a whistleblower who provided information in connection with an insider trading case, the agency added.
Karen Kaiser, 45, was once married to David Zilkha, a former Microsoft employee who the SEC said tipped off Pequot in April 2001 about an upcoming earnings report from the software maker, while they were in the process of hiring him.
The SEC said Samberg traded on the inside information, reaping $14.8 million of illegal profits.
Documents in the Zilkhas’ divorce proceedings revealed that Pequot agreed to make a $2.1 million payment to David Zilkha several years after his departure from the firm in November 2001.
Zilkha, in a deposition in the divorce case, invoked his right against self-incrimination when asked whether he’d received that $2.1 million.
“We initially got involved to figure out why David Zilkha seemed so reluctant to tell Karen about this $2.1 million payment from Pequot,” said Mark Sherman, a lawyer in Stamford, Conn., who represents the Kaisers.
Glen Kaiser, 52, of SouthBury, could not be reached.
Pequot once held $15 billion of assets. Samberg began winding down Pequot last year.
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