Thursday, 5 March 2015
Last updated 39 min ago
May 28 2010 | 10:11am ET
Whatever her motivations—citizenship, revenge or something else—the ex-wife of the former Pequot Capital Management employee at the center of the insider-trading allegations against the hedge fund probably won’t leave empty-handed.
Karen Kaiser—who was divorced from David Zilkha in 2005—could get a $1 million whistleblower reward for providing “direct evidence” of the alleged Pequot scam to investigators. Under a program instituted in 1989, whistleblowers can be awarded up to 10% of the fines paid in a case. Pequot and founder Arthur Samberg agreed yesterday to pay $10 million in fines—and almost $18 million in disgorgement and prejudgment interest—to settle the Securities and Exchange Commission’s insider-trading allegations.
Neither Pequot nor Samberg, who decided to shutter the hedge fund last year after the SEC renewed its probe, admitted any wrongdoing. The SEC is still pursuing its case against Zilkha, who is alleged to have passed tips about Microsoft Corp., where he was formerly employed, to Pequot.
Kaiser's lawyer told Bloomberg News that his client will pursue the reward.
The SEC originally dropped its case more than three years ago, citing a lack of evidence. But the Zilkha divorce case solved that problem. Incriminating e-mails between Zilkha and Pequot employees, including Samberg, were found on a hard drive Kaiser copied from the couple’s shared computer. Also as part of the divorce, Zilkha’s psychologist testified that her patient was fired when he stopped providing confidential tips to Pequot.
Pequot later settled with Zilkha for $2.1 million.
Jan 23 2015 | 1:00pm ET
In our new section, FINtech Focus, we will profile one of these firms each week. While fintech is a broad category, we will be focusing on firms that specifically cater to the alternative investment industry. Read more…