Feds raid 2 hedge funds linked to trading probe

A law enforcement official says the Federal Bureau of Investigation has raided two hedge funds linked to a broader insider-trading probe.

The official says bureau employees searched the offices of Level Global Investors LP, of Greenwich, Conn., and Diamondback Capital Management LLC, of Stamford, Conn. The law enforcement official spoke on condition of anonymity because he was not authorized to discuss an ongoing case.

Both firms are run by former managers of SAC Capital Advisors LP, of Stanford, Conn.

FBI spokesman James Margolin said the agency is “conducting searches in an ongoing investigation.” He would not comment further.

The Wall Street Journal has reported that 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 Journal reported this weekend.

A spokesman for Level Global confirmed that FBI searched the firm’s offices.

“We can confirm that agents from the Federal Bureau of Investigation visited our offices this morning as part of what we believe to be a broader investigation of the financial services industry discussed in media reports over the weekend,” the spokesman said in a statement. “We are cooperating fully with the authorities and, at the same time, we are fully operational and continue to work diligently for the benefit of our investors.”

Diamondback portfolio manager Andrea Feinstein declined to comment about the search. A spokesman for the Securities and Exchange Commission did not respond to requests for comment.

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