The SEC said the case involved closely associated hedge fund traders at Stamford, Connecticut-based Diamondback Capital Management LLC and Greenwich, Connecticut-based Level Global Investors LP.
Anthony Chiasson, a co-founder at former hedge fund group Level Global Investors, was among four men arrested on Wednesday. He surrendered to the FBI in New York.
Jon Horvath, an analyst at Sigma Capital Management, an affiliate of hedge fund SAC Capital Advisors in Manhattan, was arrested at his New York City home, while Diamondback portfolio manager Todd Newman was arrested in Needham, Massachusetts. Whittier Capital analyst Danny Kuo, of San Marino, California, was also arrested.
In a letter to investors, Diamondback Advisors co-chief investment officers Richard Schimel and Larry Sapanski called the actions by prosecutors and the SEC “an important step towards putting this matter behind us.”
The company has fully cooperated with authorities since learning of the inquiry and believed the “fruits of that cooperation” were reflected in the charges announced on Wednesday, they said.
Newman was placed on leave immediately after the Nov. 22, 2010, search, and Tortora resigned from the firm in April 2010, they added.