FBI Raids Hedge Funds Level Global and Diamondback in Insider-Trading Probe

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by
The Washington Post

FBI Raids Hedge Funds Level Global and Diamondback in Insider-Trading Probe

by
Zachary A. Goldfarb

Federal investigators raided the offices of several hedge funds Monday
morning, a federal law enforcement official said, advancing a broad
investigation into insider-trading.

FBI agents searched the offices of Level Global Investors and
Diamondback Capital Management, two hedge funds that manage billions of
dollars in assets.

"The FBI is executing court-authorized search warrants in an ongoing
investigation. This matter is sealed, and we have no additional
comment," said Richard Kolko, an FBI spokesman.

Andy Merrill, a spokesman for Level Global, based Greenwich, Conn., said
that the FBI visited the company Monday morning "as part of what we
believe to be a broader investigation of the financial services
industry."

A spokesman for Diamondback Capital, based in Stamford, Conn., could not be immediately reached for comment.

The raids come as federal prosecutors in New York are in the advanced
stages of an extensive insider-trading probe that could lead to criminal
charges against Wall Street traders and executives, according to law
enforcement officials.

Authorities had planned to file charges in the investigation by year's
end but are now considering moving up the timetable after details of the
probe came out in a article in the Wall Street Journal on Saturday.

Preet Bharara, U.S. attorney for the Southern District of New York, has
led the charge on insider-trading investigations, calling the crime a
"top criminal priority" and warning of "rampant" insider trading.

According to published reports, SAC Capital Advisors, one of the biggest
names in the hedge fund world, run by hedge fund master Steve Cohen, is
being examined by investigators. Both Level Global and Diamondback were
founded by SAC alumni.

A spokesman for SAC did not immediately reply to a request for comment.

Diamond owns stock in 706 companies - mostly energy and financial
services concerns - with a value of $4.13 billion, according to
Bloomberg News. Level Global owns stocks in 77 companies worth $3.08
billion, according to Bloomberg.

The federal investigation, conducted by the U.S. attorney's office in
Manhattan and the FBI, has been underway for several years and extends
far beyond Wall Street to financial offices across the country.

The Securities and Exchange Commission is conducting a parallel civil probe.

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