"Are there hedge funds doing illegal things? I'm sure," the New York investor said from the office off his bedroom, where his wife was awake. The investigators, though, "are aggressively attempting to expand the definition of insider trading, and using these incredibly aggressive tactics that are business-threatening, and that combination is a dangerous brew."

He tried to troubleshoot his iPad as he talked. "They hate Steve Cohen. Why? Because he's really rich; he's worth billions; he's got a braggadocio art collection," he said. "If they nail that guy, it's a ticket to a $4 million-a-year white-collar job at Davis Polk. That's what motivates them! It's just a fact."

"For a government rooted in populism, arresting and prosecuting hedge fund managers serves to distract voters," a note from Monness, Crespi, Hardt & Co's Sydney Williams III declared earlier in the day. His firm is the quiet boutique brokerage that organized a private "idea dinner" for hedge funds this February, where a short talk from an SAC Capital manager about shorting the euro led to an investigation into collusion. "But it makes better headlines to go after 'evil' and 'greedy' hedge fund managers," the note's finale says. "In acting rashly, the wrong people are made to suffer."

This historically huge hedge fund raid, Wall Street thinks, is overzealous and underwhelming. For finance, it's been the year of the shrug. "When I read this," a former Lehman Brothers managing director told this newspaper when the firm's Repo 105 accounting scandal broke in March, "I giggle a little bit."

It was the same response when Goldman was sued a month later; the stock market collapsed in the so-called "flash crash" after that; and the foreclosure fiasco unfolded this autumn. To outsiders, those may have felt like crises that not only exposed systemic corruption and ravenousness, but could fundamentally change the way Wall Street makes its money.

But life went on. "They just want to be mad and don't know what they're talking about and want to be outraged," another Lehman alumnus, a senior executive, had said.

"It's just the scandal du jour, I suppose," a mortgage strategist at a recently subpoenaed hedge fund said on Monday. "I reckon we're all a bit jaded. So yeah, from my perspective, it's a 'jeez, here we go again,' laugh kind of thing."

BY THE TIME a Nov. 20 story went up on The Journal's Web site, announcing investigations into "multi-insider trading rings" that touched Goldman Sachs, UBS, Deutsche Bank and the multibillion-dollar fund Ziff Brothers, it had already been an odd month. On Nov. 10, the powerful Brooklyn rabbi Milton Balkany was convicted of trying to extort $4 million from Mr. Cohen's SAC in exchange for keeping quiet about insider trading. That day, it was reported that the billionaire Phil Falcone had angered Goldman by borrowing money from his own hedge fund to pay taxes.

The day before the story's debut, Bloomberg reported that FrontPoint Partners, famous for manager Steve Eisman's bet against the subprime housing market, was shutting down its $1.5 billion health care fund. Joseph F. "Chip" Skowron III, the fund's co-manager, and a former analyst at SAC, had allegedly acted on insider information about drug research. FrontPoint, which Morgan Stanley is in the middle of selling, was reportedly faced with billions of withdrawal requests, although its chief executives said in a letter to investors this month that it is "stable operationally and financially." Mr. Skowron, a handsome former Harvard physician who is said to carry a photo of himself with an ill child in a Kosovo operating room, is now on leave.

The Journal story said the insider-trading investigation was centered on expert networks like Gerson Lehrman, where consultants are paid as much as $1,000 per hour to provide "an investing edge" through information. John Kinnucan, a wonderful principal at one research firm, sent an email to clients declaring that he was on his porch sipping wine when he got a "gracious offer to wear a wire" from "two fresh faced eager beavers from the FBI," which he declined.

The note's recipients included billionaire Ken Griffin's Citadel and SAC. Indeed, ever since the arrests of the Galleon Group's Raj Rajaratnam and well over a dozen associates, including the cooperating witness and former SAC trader Richard Choo-Beng Lee, investigators' eyes have seemed to be on Mr. Cohen. On Sunday night, Reuters mentioned that ex-SAC analyst Jonathan Hollander's prosecutorial limbo. A former UBS investment banker said this year that he was given insider information from a managing director at the private-equity giant Blackstone, and also fed it to friends like Mr. Hollander.

BUT THE REAL action started on Monday. It was the Twin Peaks of Wall Street afternoons: wildly hard to follow but thrilling nonetheless.

The F.B.I. raided the $4 billion Level Global and $5 billion-plus Diamondback Capital, both Connecticut-based hedge funds run by former SAC traders. Level Global's Anthony Chiasson was recently a client of the wine-sipping Mr. Kinnucan, and also said to be an associate of Galleon's Todd Deutsch. His firm recently sold a stake to Goldman.

At Diamondback, meanwhile, cofounder Rich Schimel is Mr. Cohen's brother-in-law, and his COO John Hagarty had been COO at FrontPoint, Chip Skowron III's firm. Plus, the New York State pension fund, whose kickbacks scandal has ensnared the glorious financier Steve Rattner, said it had $225 million with Diamondback. Last year, the firm returned nearly $100,000 in profits and paid about $70,000 more to settle S.E.C. complaints about stock offerings.

But a third hedge fund, Boston's Loch Capital Management, was raided, too. It's run by twins, Todd and Timothy McSweeney, well known for their friendship with Steven Fortuna, one of the hedge fund managers who pleaded guilty in the Galleon case.

Naturally, Mr. Fortuna had been linked earlier in the month to a former SAC analyst, Mark Adams. Mr. Adams' more recent firm, Balyasny, has announced that it was subpoenaed, along with SAC Capital. Citadel was reportedly subpoenaed, too. So were the $161 billion mutual fund Janus Capital and $598 billion Wellington Management, other Kinnucan clients. On Nov. 24, the expert network Primary Global Research's Don Ching Trang Chu was arrested, a few days before leaving for Taiwan. "Don is just a fun person to travel with," an online biography says. Mr. Lee, the former SAC trader, had reportedly worked with him.

BUT WALL STREET is unimpressed. "They're pointing at everybody, it seems to me," former Goldman Sachs International president Roy Smith, now an N.Y.U. professor, said. "The present attitude about bankers on the part of the government is so negative that they assume every banker and every broker is inclined to do these kinds of things."

"I do think the press is playing very, very nicely into the hands of the government on this one. I think they're sensationalizing this thing in a huge way," a source close to Mr. Cohen said. "'Ooh, they're former SAC,'" he said with a singsong. "Just because they were former SAC guys doesn't mean it reflects on the SAC of today, the SAC of three years ago, the SAC of four years ago, the SAC of five years ago."

Is Mr. Cohen nervous? "Just because you got a subpoena doesn't mean you did anything. It's a request for information," the source said. "Let's just be clear."

"There are several different investigations that started out with a great deal of momentum, and if you look at where they ended up, there's a gap," a senior trader at a major bank said on Monday. Like the New York hedge fund manager, he complained that subpoenas crush reputations. "Are they causing more damage to the system than they're trying to fix? Fellas, what are you guys doing! We're in the midst of a crisis here; clearly, we want to weed out bad actors, but what is all this?"

In letters to investors, firms like Diamondback said federal investigators are interested in only "a single employee" (plus maybe "a former employee who reported to that employee"). "It feels like, O.K.," said the trader, "this is it, a couple of guys."

"I hope for the sake of regulators and law enforcement agencies that they actually have got something, because they've created a huge amount of smoke," said one senior executive at another major bank. Like the trader, the hedge fund manager, the mortgage strategist and the source close to Mr. Cohen, the executive agreed to share thoughts with The Observer only anonymously because of ongoing investigations. "And if the fire turns out to be small, it will be kind of embarrassing for them. But right now, the results don't seem to be breathtaking."

"It doesn't make me nervous," the hedge fund manager said late Monday night, annoyed that his digital copy of the new financial crisis book All the Devils Are Here wasn't downloading properly. "But it does make me concerned that I'm going to get some willy-nilly subpoena--and something to write about in the press. And it's going to concern my investors, and it'll be bad for business, and it will take however long to defend myself."

mabelson@observer.com