The Great insider-trading raid of 2010 continues! The Wall Street Journal reports that federal agents have now raided the offices of Loch Captial Management, a Boston-based hedge fund that concentrates on the technology center.
The third firm raided is Loch Capital Management LLC, based in Boston, people familiar with the matter say. Leonard Pierce, a lawyer for Loch Capital, declined to immediately comment.
The two brothers who run Loch Capital, Timothy and Todd McSweeney, ran into trouble with their investors earlier this year over their connection with Steven Fortuna, the principal at S2 Capital who pled guilty to conspiring with a hedge-fund manager to trade nonpublic information about Dell Computer. His plea came in cooperation with a far-reaching SEC insider-trading probe into hedge fund advisor Galleon Management. According to a Bloomberg report from late last year, he also relied on inside information when trading shares of Akamai Technologies.
A January Reuters report outlines the relationship between Mr. Fortuna and the McSweeneys:
Federal prosecutors did not identity the manager with whom Fortuna had shared insider information, but a court filing said Fortuna and the unidentified manager were friends.
Other investors who yanked money were also concerned that Loch Capital, whose assets peaked at $2.4 billion in early 2008, was sitting on too much cash, said people familiar with the situation.
Reuters also said that staff at the McSweeney brothers’ funds were leaving at an accelerated pace in the months leading up to January 2010.
The FBI had already claimed two Connecticut hedge fund strongholds, Level Global and Diamondback Capital Management earlier today.