FBI agents raided the Connecticut
offices of two hedge funds as part of a broad insider trading investigation.
The two
hedge funds, Diamondback Capital Management and Level Global Investors, are run
by former managers of Steve Cohen’s SAC Capital Advisors.
David Ganek, a former SAC trader,
manages about $4 billion in assets through Level Global Investors. Diamondback
Capital Management oversees more than $5 billion in assets, the Journal said,
citing SEC filings.
A spokesman for Level Global
confirmed that federal agents had searched the company’s offices and that the
hedge fund is cooperating with authorities.
The raid follows an earlier report
that federal authorities were preparing a slew of insider trading charges
against the $1.7 trillion hedge fund industry. The probe into allegations of
widespread misconduct will likely involve consultancies, investment banks and
trading firms.
The charges, which could be filed
as soon as this year, would be on top of those made in an existing case against
Raj Rajaratnam and his hedge fund, the Galleon Group.
Twenty-three former hedge fund
managers, lawyers and others have faced criminal or civil charges in the case,
which prosecutors called the largest insider trading case in hedge fund history.
Fourteen have pleaded guilty to criminal charges, eight have pleaded not guilty
and one is at large.
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