Hedge Fund Level Global To Liquidate Funds

NEW YORK (AP) - One of several hedge funds that is under scrutiny in an insider trading probe is liquidating its funds and returning cash to investors.

Level Global Investors LP expects to fully liquidate by the end of March, according to a letter to investors obtained by The Associated Press on Friday.

Founder David Ganek said in the letter Friday that the ongoing government investigation threatens the firm's ability to meet its fiduciary duty to investors and it would be in the best interest of investors to wind down the fund. The firm managed $3.09 billion as of Sept. 30, 2010, according to the most recent filing with the Securities and Exchange Commission.

The FBI raided Level Global's New York offices in November as part of a broad probe of insider trading in the financial industry. Ganek said in the investor letter that the hedge fund has not been accused of wrongdoing and maintained it always acted lawfully.

The agency also searched the offices of Diamondback Capital Management LLC in Stamford, Conn., and the address in Boston that matched the headquarters of Loch Capital Management LLC.

U.S. Attorney Preet Bharara in Manhattan has made white-collar crime a top priority and his office and the FBI have recently added more resources to uncover insider trading.

Hedge funds are largely unregulated pools of capital that traditionally cater to institutional investors and very wealthy individuals. Hedge funds typically require clients to put up hundreds of thousands of dollars in initial investments, unlike mutual funds that allow an investor to start with just a few thousand dollars.