THE FBI has raided three American hedge funds as part of a widening investigation into potential insider trading within the $1.7 trillion (£1.1 trillion) hedge fund industry.
The funds include Diamondback Capital Management and Level Global Investors, two Connecticut funds run by former managers of Steven Cohen’s SAC Capital Advisors.
The third fund is Boston-based Loch Capital Management, a person familiar with the raid said. Loch has had close ties with a witness who pleaded guilty in a separate insider trading probe that centres on hedge fund Galleon Group.
The raids come as federal prosecutors prepare to unveil a series of new insider trading cases against hedge fund traders, consultants and Wall Street bankers, several lawyers familiar with the investigation said.
FBI spokesman Richard Kolko confirmed that search warrants had been executed on Level Global Investors and Diamondback Capital Management, both founded by former SAC Capital Advisors traders.
“Agents from the FBI’s New York and New Haven offices are conducting a search of the offices of Diamondback Capital Management,” Kolko said. “The search is ongoing at that address and all matters regarding the matter remain under seal.”
Level Global was founded in 2003 by David Ganek, a former fund manager under Steven Cohen’s hedge fund SAC Capital Advisors. Diamondback, declined to comment. But a spokesman for Level Global confirmed the FBI had visited its offices.