Arrests reported in $61.8M insider-trading schemes

Two senior hedge fund employees are reported to be among seven investment professionals rounded up Wednesday in insider trading schemes that may have netted $61.8 million in illegal profits.

U.S. Attorney Preet Bharara is to detail the arrests and charges early Wednesday afternoon in Manhattan.

Reuters reported that at least two senior hedge fund employees are among seven facing charges as part of the government's 5-year probe into insider trading.

The arrests reflect a widening of the government's long-running probe into the alleged sharing of confidential information on publicly traded corporations with hedge fund managers and analysts. In the biggest case so far, onetime billionaire Raj Rajaratnam was convicted of insider trading and is now serving an 11-year prison term.

Bloomberg News reported that a complaint filed by the FBI refers to trades  of stocks in Nvidia Corp. and Dell Inc.

Among those facing charges are:

Anthony Chiasson, who co-founded the Level Global Investors hedge fund, is among those expected to face charges, and is expected to turn himself in to authorities. Bloomberg News, citing sources, reported that when FBI agents sought to arrest Chiasson at his Manhattan home, they encountered Wall Street Journal reporters at the building. Chiasson had apparently left before law enforcement arrived. Calls to The Wall Street Journal owner, News Corp., were not returned.

Todd Newman, who headed technology trading for Diamondback Capital Management from Boston. He also has been arrested, Reuters reported. Newman had been placed on leave of absence in 2010 and subsequently was let go by that firm. Reuters in November reported the government's interest in Newman.

Jon Horvath, who is currently employed at Sigma Capital Management, a unit of Steven A. Cohen's $14 billion hedge fund SAC Capital, was also arrested, one of the people said. A spokesman for SAC Capital could not immediately be reached for a comment.

Bloomberg News also reported that Danny Kuo and Sandeep Goyal are among those arrested, according to a complaint. There are no specifics on either man.

The identity of other two could not immediately be confirmed.

Sources to Reuters and Bloomberg News declined to be named because of a lack of authority to speak about the arrests. Lawyers for Chiasson, Newman and Horvath did not immediately respond to requests for a comment or could not immediately be reached.

More than 50 people have been arrested or charged in overlapping federal insider trading probes that were first unveiled in October 2009. Most of these people have pleaded guilty or been convicted.

Many of the cases have been based at least in part on the use of government wiretaps authorized by federal judges.

Four hedge fund firms -- Level Global, Diamondback, Loch Capital Management and Barai Capital Management -- were raided by the FBI in late 2010 as part of the insider-trading probe. Level Global, Loch and Barai have since folded.