Economy-Finance

UPDATE 1-Pequot employee told psychologist he supplied tips

* Divorce offers insight to Pequot insider trading case

* Therapist: Zilkha fired for not supplying information

* Spokesman for Pequot manager Samberg declines comment

* SEC and Justice Department also decline to comment (Recasts with details from divorce proceedings, senators’letter)

By Rachelle Younglai and Matthew Goldstein

WASHINGTON/NEW YORK, Nov 19 (Reuters) – A former Pequotemployee told a psychologist he was fired from the hedge fundwhen he was unable to provide further inside information aboutMicrosoft Corp (MSFT.O ), his previous employer, according to aa deposition revealed on Thursday.

David Zilkha, according to the psychologist, said Pequotmanager Arthur Samberg expected him to provide insiderinformation about Microsoft.

“(Zilkha) said that Mr. Samberg wanted him to get insideinformation on Microsoft and that when Mr. Zilkha stoppedproviding it he was fired,” psychologist Peggy Thomson said inan Oct. 15 deposition in Zilkha’s divorce proceeding.

Samberg has told investors that the U.S. Securities andExchange Commission has alerted him that it is consideringfiling civil insider trading charges against him and Pequot.

He had told investors in May he was shutting down his firmbecause the SEC had reopened its probe into trades Pequotconducted in Microsoft over eight years ago.

A spokesman for Samberg declined to comment on Thursday.

Pequot, which invested $15 billion at its peak and rankedas one of the $1.4 trillion hedge fund industry’s mostsuccessful firms, has previously told clients it believes thecharges are without merit and it plans to “defend the mattervigorously.”

According to another deposition in the divorce case, Zilkhaasserted his Fifth Amendment right against self incriminationlast month when asked whether he had been contacted by eitherthe SEC or the FBI in conjunction with an investigation ofPequot and the alleged insider trading in shares of Microsoft.

He also declined to say whether he had received a Wellsnotice from the SEC — an official notification that he couldbe facing a possible enforcement action.

Calls to Zilkha’s lawyer were not immediately returned.Attempts to reach Zilkha and Thomson were not successful.

U.S. senators Arlen Specter and Charles Grassley sent aletter to the SEC on Wednesday offering the information fromthe October depositions, saying it had already been forwardedto U.S. prosecutors.  Continued…