More insider trading arrests coming, reports say
A year later, after scads of arrests, it appears that prosecutors are still not done uncovering wrongdoing.
Authorities are preparing to arrest managers at hedge funds and mutual funds who are suspected of using inside information to make lucrative trades, according to reports out Thursday morning that cite anonymous people close to the investigation.
The new arrests are likely to come from hedge funds and mutual funds that used so-called expert network firms, which connected insiders at public companies with investors who wanted to trade stock in the companies.
Some of the expert network firms and investors at the center of the investigation have been located in California, close to the technology industry, but the funds mentioned in the new reports are based on the East Coast.
The arrests will likely come from four of the hedge funds that were raided last year, including Level Global, Loch Capital Management, Barai Capital and Diamondback Capital Management, Reuters reports. Diamondback is the only one of the four firms that has survived the turmoil.
The Wall Street Journal says that a mutual fund analyst at Neuberger Berman may also face charges.
The New York Times reports that a former Level Global analyst is cooperating with authorities.
These cases are tangentially related to the investigations that brought down Raj Rajaratnam, the hedge fund magnate who recently received the longest-ever prison sentence for insider trading, and that recently led to the arrest of former Goldman Sachs board member Rajat Gupta.
-- Nathaniel Popper
Photo: The San Francisco federal courthouse where a judge last year refused to grant bail for Winifred Jiau, arrested in relation to her work as a consultant for Primary Global Research. Credit: David Paul Morris / Bloomberg News.