Federal Bureau of Investigation agents raided the offices of three hedge funds

[Sandra]

By SUSAN PULLIAM, JENNY STRASBURG And MICHAEL ROTHFELD

Federal Bureau of Investigation agents raided the offices of three hedge
funds as part of a high-profile insider-trading investigation, and more
could be on the way, according to people familiar with the matter.

The Connecticut offices of Diamondback Capital Management LLC and Level
Global Investors LP were raided. Both hedge funds are run by former
managers of Steve Cohen's SAC Capital Advisors.

The third firm raided is Loch Capital Management LLC, based in Boston,
people familiar with the matter say. Leonard Pierce, a lawyer for Loch
Capital, declined to immediately comment.

"The FBI is executing court-authorized search warrants in an ongoing
investigation," said Richard Kolko, an FBI spokesman, who declined to
comment further.

Loch had $750 million in assets as of the start of this year, according
to SEC filings. The firm, run by brothers Timothy and Todd McSweeney,
didn't immediately return a message seeking comment. Leonard Pierce, a
lawyer for Loch Capital, declined to immediately comment.

The McSweeney brothers are acquaintances with Steven Fortuna, a
hedge-fund manager who pleaded guilty in the Galleon case and agreed to
cooperate in that ongoing investigation.

Level Global Investors LP is a Greenwich, Conn., hedge-fund firm run by
David Ganek, a former SAC Capital trader and art collector. He started
Level Global in 2003 and earlier this year reported managing about $4
billion in assets.

Diamondback Capital Management LLC is based in Stamford, Conn., and was
started in 2005. It oversees more than $5 billion in assets, according
to SEC filings.

The moves by the FBI follow an article by The Wall Street Journal
describing an insider-trading investigation that is expected to
encompass consultants, investment bankers, hedge-fund and mutual-fund
traders. The investigation is said by people close to the situation to
eclipse in size and magnitude past insider-trading probes.

Messages left with Richard Schimel, Diamondback's co-chief investment
officer, and Diamondback's general counsel, Joel Harary, on their office
phones weren't immediately returned.

A spokesman 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."

Write to Susan Pulliam at [e-mail] and Jenny Strasburg at [e-mail]
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