Two hedge fund employees are in custody in the U.S. probe of insider trading that has already snagged Galleon Group LLC co-founder Raj Rajaratnam, according to a person familiar with the matter.
One person was arrested in Boston today by the Federal Bureau of Investigation and another in New York, according to the person, who asked not to be identified because the arrests haven’t been made public. Two more people will also surrender to authorities later today, the person said.
Securities fraud charges stemming from the probe will be announced today by the office of Manhattan U.S. Attorney Preet Bharara, the person said. Ellen Davis, a spokeswoman for the office, declined to comment on arrests.
Bharara’s office has charged at least 56 people with insider-trading and more than 50 have pleaded guilty or been convicted after trial since 2009. They included Rajaratnam, who was convicted in May and is serving 11 years in prison.
Last month, another person familiar with the matter said employees of Neuberger Berman Group LLC, Level Global Investors LP and Diamondback Capital Management LLC could be facing criminal charges as part of the probe.
The identities of the people arrested or expected to surrender today haven’t been publicly disclosed.
Steve Bruce, a spokesman for Stamford, Connecticut-based Diamondback, declined to comment on the probe at the time it was reported. Rich Chimberg, an outside spokesman for Neuberger Berman, said at the time of last month’s report that the firm was unaware of any probe involving an employee identified by the paper as an analyst for the firm.
Level Global told clients last February that it was shutting, eight years after David Ganek and Anthony Chiasson founded the hedge fund, because of the U.S. probe. They said at the time that Level Global wasn’t a target of the investigation nor had it been alleged to have engaged in any misconduct.
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