Feds Turn Up Heat On Wall St., Raid 3 Hedge Funds

The Federal Bureau of Investigation is pouring over boxes of evidence collected in a raid on a Boston hedge fund and two other East Coast firms Monday.

The Wall Street Journal reports that authorities are investigating whether the companies earned tens of millions of dollars in illegal profits by using secret information about mergers.

An FBI official says federal agents served a search warrant on Loch Capital Management in Boston. Another law enforcement official says the FBI searched the New York offices of Level Global Investors LP, and the Stamford, Conn., headquarters of Diamondback Capital Management LLC. The officials spoke on condition of anonymity because he was not authorized to discuss an ongoing case.

Calls to Loch Capital were not returned.

Loch Capital is run by brothers Timothy and Todd McSweeney. They have been linked in news reports to hedge-fund manager Steven Fortuna. Fortuna pleaded guilty last year to charges stemming from an earlier insider trading investigation by the Securities and Exchange Commission.