WASHINGTON, D.C. — Federal investigators have turned up the heat on Wall Street, raiding three hedge funds in what one of the targets called a wide-ranging probe of insider trading.
The FBI on Monday searched the New York offices of Level Global Investors LP, and the Stamford, Conn., headquarters of Diamondback Capital Management LLC, a law enforcement official said. The official spoke on condition of anonymity because he was not authorized to discuss an ongoing case.
Another FBI official said the agency also searched a third site, at 30 Federal St. in Boston. Hedge fund Loch Capital Management LLC has its headquarters at that address.
The FBI said in a statement that it had executed search warrants in the three states “in an ongoing investigation.” Agency spokesmen said they could not comment further because the court documents are under seal.
Four men wearing overcoats and badges emerged late Monday from the Level Global offices in midtown Manhattan, pulling rolling suitcases behind them and carrying nylon backpacks. They declined to answer reporters’ questions.
The raids rattled Wall Street and bank shares slumped Monday as news of FBI action spread. Goldman Sachs Group Inc. sank 3.4 percent, while Bank of America Corp. fell 3.1 percent. Several white-collar defense lawyers in New York said they were bombarded by calls from traders seeking representation.
The FBI and other law enforcement agencies are investigating insider trading by hedge funds, mutual funds and investment bankers, the Wall Street Journal reported this weekend. The companies allegedly earned tens of millions in illegal profits using secret information about mergers, according to the Journal.