Agents from the Federal Bureau of Investigation searched the offices of Level Global and Diamondback Capital Management.
The searches have fuelled speculation that US authorities are conducting their biggest ever probe into alleged insider trading.
Agents from the Federal Bureau of Investigation searched the office of Level Global, a hedge fund founded in 2003 by David Ganek, a former trader at SAC Capital, one of the world's biggest hedge funds. The Connecticut office of Diamondback Capital Management, another fund, is also believed to have been searched. Diamondback was founded by traders including Rich Schimel. Reports also claimed that Loch Capital Management, in Boston, had been searched by the FBI.
"We can confirm that we've conducted a couple of searches in connection with an investigation," said Jim Margolin, an FBI spokesman.
A spokesman for Diamondback did not return calls for comment.
On Wall Street, banking shares were under pressure after reports over the weekend that the FBI, the office of Manhattan's US Attorney and the Securities and Exchange Commission are poised to file charges of alleged insider trading. Shares in Goldman Sachs, which was named by the report in the Wall Street Journal, were the biggest faller, declining almost 4pc. Goldman declined to comment. The sector was further troubled as Ireland's debt crisis prompted renewed fears over the health of US banks.
Authorities in the US have stepped up their investigations into alleged insider trading since the financial crisis, with Preet Bharara, Manhattan US Attorney, playing a key role. In a speech last month, Mr Bharara said that insider trading is a "top priority" and "insider trading is rampant and may even be on the rise".
An area of focus of the three-year investigation are so-called "expert networks", or conversations between investors and former and current employees of companies they are considering investing in. Though widely used in the US, the networks are not supposed to pass on confidential information about the companies.
US regulators have been widely criticised for failing to be sufficiently rigorous in uncovering financial crime at a time when many Americans' faith in the financial system has been shaken.
On Wall Street, banking shares were under pressure after reports over the weekend that the FBI, the office of Manhattan's US Attorney and the Securities and Exchange Commission are poised to file charges of alleged insider trading. Shares in Goldman Sachs, which was named by the report in the Wall Street Journal, were the biggest faller, declining almost 4pc. Goldman declined to comment. The sector was further troubled as Ireland's debt crisis prompted renewed fears over the health of US banks.
Authorities in the US have stepped up their investigations into alleged insider trading since the financial crisis, with Preet Bharara, Manhattan US Attorney, playing a key role. In a speech last month, Mr Bharara said that insider trading is a "top priority" and "insider trading is rampant and may even be on the rise".
An area of focus of the three-year investigation are so-called "expert networks", or conversations between investors and former and current employees of companies they are considering investing in. Though widely used in the US, the networks are not supposed to pass on confidential information about the companies.
US regulators have been widely criticised for failing to be sufficiently rigorous in uncovering financial crime at a time when many Americans' faith in the financial system has been shaken.
