SAC Capital receives subpoena over suspected insider trading

SAC Capital, the giant hedge fund run by billionaire Steven Cohen, told its investors that it has received an "extraordinarily broad" subpoena, as the US authorities widened their investigation into suspected insider trading on Wall Street.

Mr Cohen's firm was the highest-profile among several to disclosure requests for information yesterday, a day after the FBI raided three hedge funds. More raids are expected in the coming days, and prosecutors are aiming to make arrests and lay charges within weeks.

The subpoena does not zero in on particular individual securities, sectors or trading strategies, SAC said in a letter to investors, and does not "shed much light on whom or what the government may be investigating".

The letter went on that neither the subpoena nor any other information of which the firm is aware suggests that anyone at SAC has engaged in wrongdoing, and it said it intended to cooperate with the government "professionally".

Wall Street is bracing for further revelations, even as traders complain privately that federal authorities may be widening the definition of insider trading and conducting fishing expeditions against powerful hedge fund managers, such as Mr Cohen.

Shares in Janus Capital, a Colorado mutual fund manager, were briefly suspended from trading while it disclosed that it had received a request for information from investigators, as did Boston-based Wellington Management.

Like SAC, Wellington and Janus were among a number of firms which used the services of Broadband Research, an "expert network" company which puts hedge funds in touch with experts from industries and companies in which they are interested. Broadband's founder, John Kinnucan, went public to describe how FBI officers had asked him to participate in a wiretap of his clients - something he declined to do. He says Broadband and its clients have never participated in any insider dealing.

The latest raids have reignited rumours that the authorities were pursuing wrongdoing at SAC which, with assets under management of around $12bn, is one of the world's largest hedge funds and also one of the most voracious in pursuing information on which to base its trading strategies. Mr Cohen has been dogged by rumours of insider trading for many years, though his defenders say the suggestion is the result of jealousy over his firm's persistently strong performance.

In a withdrawn lawsuit, Mr Cohen's ex-wife accused him of insider trading early in his career. A former employee was one of those who pleaded guilty in the case against hedge fund star Raj Rajaratnam last year, and two of the three firms raided on Monday - DiamondBack Capital Management and Level Global Investors - are run by former managers from SAC, including Mr Cohen's brother-in-law. The third firm raided was Loch Capital Management.

Mr Cohen defended himself in an interview with Vanity Fair in July. "I've had a rough six months," he told the magazine. "I could not understand it, what the hell was going on. It was like a circus, a fucking circus. Well, things are finally calming down. The press is moving on. This story will be the last anyone reads about me for a while, I think."

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