Pequot Whistleblower Gets $1 Million Reward

Jul 26 2010 | 12:57pm ET

David Zilkha should have read his William Congreve.

Hell has no fury like a woman scorned, but Zilkha’s ex-wife now has $1 million courtesy of the federal government and Zilkha’s former employer, Pequot Capital Management.

Karen Kaiser and her new husband, Glen, were awarded $1 million for blowing the whistle on an alleged insider-trading scheme at the famed, and now defunct, Connecticut hedge fund. Kaiser discovered some potentially damning e-mails between her husband and Pequot employees, including founder Arthur Samberg, during their divorce five years ago. She turned them over to the Securities and Exchange Commission—which led the regulator to reopen its insider-trading probe of Pequot, which it had closed three years ago due to “insufficient evidence.”

In May, Samberg and Pequot settled the charges for $28 million, including $10 million in fines. Under a 20-year-old program at the SEC, whistleblowers are eligible for up to 10% of the fines paid in a case. The Kaisers are the biggest beneficiaries ever of that program.

Samberg shuttered Pequot last year after the SEC relaunched its investigation.

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