Hedge Fund Raid

The FBI conducted raids on three hedge funds today, in connection with its massive investigation on insider trading on Wall Street.


A quick rundown of hedge funds involved:

Diamondback Capital Management

This fund is run by managers Larry Sapanski and Richard Schimel, both formerly of SAC Capital. The fund has $5.3 billion in assets under management. Diamondback currently owns—or once owned—HGSI a genomics-based pharmaceutical company that was involved in an insider trading case, resulting in the arrest of a doctor earlier this month. A third cofounder Chad Loweth, left earlier this month, at about the time it's believed the current investigation against Diamondback began to ramp up. (Ownership in HGSI according to official SEC documents, made available by Business Insider.) According to their Bloomberg profile , Diamondback invests in equities globally, including emerging markets.

Diamondback is located not far from the former mothership, SAC Capital, in Greenwich, Connecticut.Perhaps one of the most interesting take aways when looking at the hedge funds targeted by the FBI is this first: Two of the hedge funds—and three of the hedge fund managers—are former employees ofSAC Capital. Insider.) According to their Bloomberg profile, Diamondback invests in equities globally, including emerging markets.

Diamondback is located not far from the former mothership, SAC Capital, in Greenwich, Connecticut.

Level Global Investors is run by its managing cofounders, Anthony Chiasso and David Ganek. Chiasso is also a former SAC Capital employee. Level Global's assets under management are believed to be about $4 billion. According to their Bloomberg profile, Level Global also invests in equities—typically in the technology and financial services sector. Level Global Investors is also headquartered in Connecticut.

According to the Wall Street Journal article linked to above, a spokesperson for Level Global said:"We can confirm that agents from the Federal Bureau of Investigations 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. 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."

Loch Capital Management

According to a New York Times DealBook story from earlier this year, the fund is run by McSweeney Brothers, Timothy and Todd.

Loch had received attention at the time the DealBook article was written due to the friendship of the McSweeney brothers with Steven Fortuna, a co-founder of S2 Capital Management. Fortuna pleaded guilty to insider trading charges in November of 2009 in a case related to the Galleon Group scandal. According to the DealBook article, AUM had been as high as $2 billion— prior to swirling rumors after Fortuna's guilty plea. The Wall Street journal article places Loch Capital's the AUM at about $750 million, at the start of this year. (So far, of the three hedge funds, it seems that the least is known about Loch Capital. This is perhaps because less has been written about Loch that is available publicly information is available publicly on that company—or possibly because it is located outside of the Meritt Parkway friendly Greenwich, Connecticut.)

You have to wonder if eyes will now turn to one of the bigger kids on the block:

SAC Capital

, a group of hedge funds run by Steven A. Cohen—with $12 billion dollars of assets under management.

It seems natural to wonder about SAC for two principal reasons: 1) The existing raft of speculation about SAC employee's involvement in the Galleon Group case; and 2) the new attention garnered from today's raid on three hedge funds—two of which employed three former SAC employees.

Hat Tip to Courtney Comstock at Business Insider:


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