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Washington • The FBI has raided three hedge funds tied to a broader insider-trading investigation, law enforcement officials said Monday.
Bureau employees searched the New York offices of Level Global Investors LP and the Stamford, Conn., headquarters of Diamondback Capital Management LLC.
The FBI confirmed that it executed search warrants at both locations and a third at 30 Federal St. in Boston. Hedge fund Loch Capital Management LLC has its headquarters at that address.
The FBI and other law enforcement agencies are investigating insider trading by hedge funds, mutual funds and investment bankers. The companies allegedly earned tens of millions in illegal profits using secret information about mergers, the Wall Street Journal reported this weekend.
Diamondback and Level Global both are run by former managers of SAC Capital Advisors LP, of Stamford, Conn. Diamondback manages about $4.71 billion, according to public filings. Level Global manages $3.09 billion, filings show.
Loch Capital is run by brothers Timothy and Todd McSweeney. The brothers have been linked in news reports to hedge-fund manager Steven Fortuna. Fortuna pleaded guilty last year to charges stemming from an earlier insider trading investigation by the Securities and Exchange Commission.
The raids come a month after U.S. Attorney Preet Bharara in Manhattan told the New York City Bar Association that white-collar crime was on the rise, carried out by Wall Street heavyweights who consider inside information "a performance-enhancing drug that provides the illegal 'edge' to outpace their rivals and make even more money."
A spokesman for Level Global confirmed that the FBI searched the firm's offices. Diamondback portfolio manager Andrea Feinstein declined to comment about the search. A spokesman for the SEC did not respond to requests for comment.
Calls to Loch Capital were not returned. Leonard Pierce, a lawyer for the fund, did not return a call seeking comment.