* Tips led to $28 million Pequot settlement
* Lawyer for couple says data on hard drive helped SEC
* Ex-Pequot employee faces administrative trial
By Jonathan Stempel
NEW YORK, July 23 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 former
The U.S. Securities and Exchange Commission said on Friday
that Glen and Karen Kaiser of Southbury, Connecticut discovered
key evidence that helped the agency reach an agreement for
Pequot Capital Management and its Chief Executive Arthur
Samberg to pay $28 million to settle fraud charges over trades
in Microsoft Corp (MSFT.O) 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 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 of
Senator Arlen Specter in January, 2009, said he and Senator
Charles Grassley had sent a letter to Samberg the prior month
asking about the payment, and that Samberg replied it was to
settle a dispute related to Zilkha's employment at Pequot.
Zilkha, in a deposition in the divorce case, invoked his
right against self-incrimination about whether he received the
$2.1 million from Pequot.
"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,
Connecticut who represents the Kaisers, in an interview on
Friday. "Once we analyzed the family hard drives, we were able
to help the SEC connect the dots."
A home number for the Kaisers could not immediately be
located. Glen Kaiser, 52, is an anesthesiologist, and a call to
his office was not immediately returned.
Pequot once held $15 billion of assets and was among the
world's most successful hedge funds. Samberg began winding down
Pequot last year.
The SEC in May began administrative proceedings against
"Mr. Zilkha adamantly asserts his innocence as to any
wrongdoing," said Henry Putzel, a lawyer for Zilkha, in an
interview on Friday. An administrative trial is expected to
begin in October, he added.
(Reporting by Jonathan Stempel in New York; Editing by Tim