Federal agents came armed with search warrants, but the documents may as well have been death warrants for the hedge funds raided in a widening insider-trading probe.
In a move lifted from an action thriller, the FBI raided three firms — taking documents and confiscating BlackBerries — on Monday as part of a probe led by Manhattan US Attorney Preet Bharara.
While the funds — Diamondback in Stamford, Conn., Level Global in New York and Loch Capital in Boston — have not been charged with any wrongdoing, legal experts said the raids could mean the kiss of death.
“This is very close to being accused of committing a crime without actually being accused,” said Thomas Gorman, a white-collar litigation expert.
Gorman warns of a backlash for Bharara if the government fails to charge the firms with wrongdoing.
Investors these days are running at the first sign of trouble. Loch Capital saw assets drop from more than $2 billion to a mere $750 million over the last year after it emerged that the firm’s founders are close with Steven Fortuna, who pleaded guilty in a separate insider-trading case against Galleon Group.
FrontPoint Partners is shuttering a $1.5 billion fund one month after a manager was implicated but not charged in an insider-trading case. Art Samberg closed down Pequot Capital months after the SEC reopened an old insider-trading probe.
The firms targeted have stressed that they have not been charged with any wrongdoing. Diamondback is also telling investors it’s the victim of a government “witch hunt,” sources said.
Meanwhile, hedge fund SAC Capital, Boston investment firm Wellington Management and Janus Capital have received subpoenas or other requests for information.
Fox Business News’ Charlie Gasparino reported that Citadel Investment Group also received a subpoena from the feds. kwhitehouse@nypost.com