Alleged Pequot Tipster Said Samberg Sought Insider Information

Nov 20 2009 | 10:47am ET

A former Pequot Capital Management employee told his therapist that he was fired when he stopped passing the firm confidential information about Microsoft Corp., his former employer.

David Zilkha, who was fired by Pequot after just a few months, told his psychologist that Pequot founder Arthur Samberg expected him to continue to provide tips about Microsoft, according to transcripts from Zilkha’s divorce proceedings. Samberg decided to shutter Pequot, once one of the world’s largest hedge funds, in May after the Securities and Exchange Commission reopened an insider-trading investigation into the firm.

The SEC already had numerous e-mails indicating that Samberg was pressing Zilkha to dig up information about Microsoft while he still worked for the software giant. Now they also have his therapists’ testimony, forwarded both to the regulator and to federal prosecutors by Sens. Charles Grassley (R-Iowa) and Arlen Specter (D-Pa.), two lawmakers who have been extremely critical of the SEC’s handing of the Pequot matter.

Zilkha told Peggy Thomson, the psychologist, “that Mr. Samberg wanted him to get inside information on Microsoft and that when Mr. Zilkha stopped providing it he was fired,” she revealed in an Oct. 15 deposition. Zilkha himself invoked his Fifth Amendment right against self-incrimination when he was asked about the Pequot investigation at his own deposition in the divorce proceedings.

The divorce has also revealed $2.1 million in payments or promised payments made by Pequot to Zilkha after his firing which stemmed from “a civil claim related to his employment and termination,” according to the hedge fund.

The SEC closed its initial investigation into alleged insider-trading at Pequot in 2006. But the agency was hammered by Grassley and Specter for its alleged preferential treatment of high-profile executives, notably Morgan Stanley CEO John Mack. Both the senators and the SEC’s own inspector general later found that the agency had improperly fired Gary Aguirre, a lawyer at the regulator who had sought to interview Mack, a former chairman of Pequot. Aguirre said he was fired for pushing too hard to talk to Mack.

After the e-mails and other information came to light during Zilkha’s divorce proceedings, the SEC reopened its investigation earlier this year, sending a Wells notice to Samberg indicating that he might face civil charges. Federal prosecutors are also looking into the case.


In Depth

Q&A: Reg A+ Will Transform the Alternative Asset Landscape

Jul 7 2015 | 4:03pm ET

In addition to easing capital formation for small companies, Regulation A+ has enormous...

Lifestyle

Fiat Chrysler Files Paperwork For Ferrari IPO

Jul 23 2015 | 5:05pm ET

Italian sportscar maker Ferrari has taken a step closer to a stock market listing...

Guest Contributor

Lifting of Foreign Ownership Limits Signals Sea Change in Vietnam's Capital Markets

Jul 28 2015 | 3:01pm ET

The lifting of restrictions on foreign ownership limits in Vietnam later this year...

 

Editor's Note