Pequot Whistleblower Eligible For $1 Million Of Fine

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.


In Depth

Hedge Fund Veteran Peter Borish Talks Trading

Dec 17 2014 | 9:32am ET

Peter Borish says 2014 was “tricky” from a trading perspective. “The best...

Lifestyle

Cohen Donates $1.5M To GOP Governors Association

Dec 10 2014 | 7:13am ET

The Republican Governors Association raised close to $25 million from October 1...

Guest Contributor

Q&A With Daniel Gallancy: Institutional Interest In Bitcoin Is Growing Steadily

Dec 12 2014 | 7:54am ET

Daniel Gallancy is founder and CEO of SolidX, a provider of total return swaps for...

 

Sponsored Content

Editor's Note

    Guidelines for Guest Articles

    Oct 22 2014 | 9:46am ET

    We are always looking for guest articles from hedge fund managers and buy-side firms.

    If you are interested in submitting a contributed piece for possible publication on FINalternatives, please take a look at the specs. Read more…

 

Futures Magazine

December 2014 Cover

Futures 2014 person of the year

Jeff Sprecher was simply looking for a platform to trade energies when launching ICE 14 years ago but it has grown to reach the pinnacle of both the listed futures and equities world.

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.