More On Legal & Compliancefrom The Advisor's Professional Library
- Suitability and Fiduciary Duty Recommending suitable investments is more than just a regulatory obligation. Many investors bring cases claiming lack of suitability, so RIAs must continuously put the onus on clients to notify the advisor of changes in their financial situation.
- How to Avoid Sabotaging Your Compliance Exam There is much more to compliance examination survival than knowing all of the rules. It helps to understand why the rules were put in placeand to recognize that examiners are not the enemy.
The FBI raided the offices of three hedge funds on Monday, seeking documents related to a series of insider trading investigations directed by the office of Manhattan U.S. Attorney Preet Bharara.
Bloomberg reports the offices of Level Global Investors LP and Diamondback Capital Management LLC, firms founded by alumni of SAC Capital Advisors, were searched by FBI agents. Agents also executed a search warrant at the offices of Loch Capital Management.
“The government has decided it needs to use force to obtain all the information that it needs,” Former AdvisorOne columnist Jacob Frenkel told Bloomberg. Frenkel is also a former federal prosecutor and lawyer with the Securities and Exchange Commission and a partner in the law firm of Shulman, Rogers, Gandal, Pordy & Ecker, P.A. “It has opted not to issue grand jury subpoenas but instead use the search warrant process.”
Steve Bruce, a spokesman for Diamondback, declined to comment for the story. Andy Merrill, a spokesman for Level Global, confirmed to Bloomberg that the FBI had searched the hedge fund’s offices. Timothy McSweeney of Loch Capital didn’t immediately respond to a phone message.
As Bloomberg notes, Diamondback, based in Stamford, Conn., owned U.S.- listed stocks in 706 companies at the end of the third quarter, with a market value of $4.13 billion, most of it in energy companies and financial services, according to data compiled by Bloomberg. Level Global, with offices in Greenwich, Conn., and New York, owned stocks in 77 companies valued at $3.08 billion, with 34% of that in consumer discretionary stocks and 31% in information technology companies.
Its biggest U.S. stock holding by market value is a 5.8% stake in Virgin Media Inc., the United Kingdom's second-largest pay-television company, according to regulatory filings for the third quarter.