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(Adds details and background on case)
WASHINGTON, Oct 13 (Reuters) - Artis Capital Management and a senior research analyst at the hedge fund have agreed to settle charges related to their failure to detect insider trading by an employee, the U.S. Securities and Exchange Commission said on Thursday.
San Francisco-based Artis Capital will disgorge profits of $5.2 million plus $1.1 million in interest and pay a penalty of $2.6 million, the SEC said in a statement.
Michael Harden, the employee's supervisor, has agreed to pay a $130,000 penalty and was suspended from working in the securities industry for 12 months, the statement said.
The employee, Matthew Teeple, was sentenced in 2014 to five years in prison after pleading guilty to conspiracy to engage in securities fraud.
Artis Capital and Harden consented to the SEC's order without admitting or denying the findings, the statement said.
Besides Teeple, a former executive of Foundry Networks Inc was sentenced to 6-1/2 years in prison in the insider trading case.
Prosecutors said David Riley, Foundry's former chief information officer, in 2008 tipped off Teeple about an unannounced plan for Brocade Communications Systems Inc to acquire Foundry for $3 billion.
That tip, along with prior information about sales figures at Foundry that Riley allegedly supplied Teeple, enabled the hedge fund to earn $39 million, prosecutors said. (Reporting by Mohammad Zargham; Editing by Phil Berlowitz and Alan Crosby)