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Hedge Funds FBI Raids

Hedge Funds FBI Raids

FBI Raids Funds Run by Former SAC Capital Traders

Following up with yesterday's breaking news that three hedge funds are now under investigation from the Federal Bureau of Investigation, the raids yesterday targeted three hedge funds as part of an insider trading probe. Two of the funds, Level Global Investors LP and Diamondback Capital Management LLC,are based in Connecticut and run by former traders at Steven Cohen's SAC Capital. The other fund is a Boston-based money manager, Wellington Management Co.
Federal Bureau of Investigation agents yesterday searched the offices of Level Global Investors LP and Diamondback Capital Management LLC in probing illegal trading by hedge funds. Both firms were founded by former SAC employees. Wellington Management Co., the Boston-based money manager that oversees $598 billion, also got a request for documents from U.S. investigators, according to a person familiar with the firm.

“They appear to have an interest in some of the traders who used to work at SAC Capital,” John Coffee, a securities law professor at Columbia University in New York, said in an interview. “Those traders that the government seems to be pursuing have to make a quick decision about whether they’re going to cooperate or whether they’re going to fight. They will get greater leniency if they give the government bigger fish.”

There has been no allegation of wrongdoing at Stamford, Connecticut-based SAC, which manages $12 billion. Jonathan Gasthalter, a spokesman for the firm, declined to comment. As of February, the firm hadn’t received a government subpoena for documents. Gasthalter declined to comment on whether SAC has been subpoenaed since then. Source

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