By LIZ MOYER
The snitch in the case that put defunct Pequot Capital and its founder Art Samberg in hot water with the Securities and Exchange Commission got a nice thank you present from the agency: $1 million for providing the evidence that lead to the SEC’s victory in the case. That’s the largest insider trading informant payment ever, the agency says.
The SEC explained in a notice Friday that while it had previously investigated allegations of insider trading in Microsoft shares by Pequot, Samberg and a former Pequot and Microsoft employee named David Zilkha, it closed that investigation without action in 2006. It wasn’t until late 2008 that Karen Kaiser, the ex-wife of Zilkha, and her new husband, Glen Kaiser, discovered key evidence on a personal computer hard drive that ultimately led to the filing of a settled enforcement action. After a scathing Congressional report on the SEC’s handling of the Pequot investigation, the agency reopened the case in 2009.
The SEC said the smoking gun was an email communication between Zilkha and another Microsoft employee that was not turned over to the SEC in the first investigation. Without admitting or denying the allegations in the SEC’s complaint, Pequot and Samberg agreed last month to pay $28 million to settle insider trading charges. Samberg, who shut down Pequot under pressure last year, was barred from the business.
What the SEC doesn’t mention (at least not Friday) is that last month it paid the former investigator who was working that case $755,000 to settle a wrongful termination case. That person, Gary Aguirre, was aggressively investigating Pequot’s trading activities when he was fired in 2005, he says, for political reasons. He was rankling powerful Wall Street executives who he says put pressure on the agency to force him to back off. The Government Accountability Project said the $755,000 settlement, in which Aguirre agreed to drop two other suits against the SEC, may also be the largest of its kind.