Diamondback Hedge Fund
Diamondback Tries to Calm Investors over Subpoena
Diamondback Capital Management, one of the three hedge funds raided last week by the Federal Bureau of Investigation, has released some information the investigation. Diamondback co-founders Lawrence Sapanski and Rich Schimel wrote a letter to investors informing them that the firm received a federal grand jury subpoena and that the investigation was not targeting the firm, rather one of the firm's portfolio managers.
The firm, based in Stamford, Connecticut, said it was told by the government it isn’t the target of the probe and that the raid was focused on one of its portfolio managers, who was put on leave, according to a letter to sent to investors yesterday.
“The warrant appears to be focused on a single employee (a portfolio manager), as well as on a former employee who reported to that employee,” Diamondback co-founders Lawrence Sapanski and Rich Schimel said in the letter, a copy of which was obtained by Bloomberg News. “One of the principal areas on which the government appears to be focused is the use of industry research consultants.”
Hedge funds Level Global Investors LP and Loch Capital Management also had their offices raided by the FBI on Nov. 22. Janus Capital Group Inc. and Wellington Management Co. were among firms that received information requests last week as part of the government’s insider-trading investigation. Source
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