The FBI raided offices of three hedge funds on Monday in a bid to unearth multiple insider-trading rings that reaped millions in illegal profits, the Wall Street Journal reported.
The Connecticut offices of Level Global Investors and Diamondback Capital Management and that of Loch Capital Management in Boston were searched by FBI agents even 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.
FBI spokesman Richard Kolko confirmed that the agency was executing "court-ordered search warrants", but declined to elaborate.
The investigation, which is being conducted by the FBI, the Manhattan US Attorney's office and the Securities and Exchange Commission, has been termed a "top criminal priority" by Preet Bharara, US attorney for the Southern District of New York, who is leading the charge on insider-trading investigations.
Level Global confirmed the raids, dubbing them "part of what we believe to be a broader investigation of the financial services industry." Diamondback Capital also said it was "voluntarily cooperating" with the FBI agents, but Loch declined to comment.
Earlier, a California research analyst, John Kinnucan, had been approached by federal agents to help the investigation into insider trading by recording conversations with SAC traders, the Wall Street Journal revealed. Mr Kinnucan declined to co-operate and has denied any wrongdoing.