Level Global: No race for exits, not U.S. probe target

By Svea Herbst-Bayliss

BOSTON (BestGrowthStock) – Hedge fund firm Level Global Investors, LP, embroiled in the U.S. government’s insider trading probe, denied on Thursday that its clients are trying to pull money out at an accelerated pace.

“Contrary to speculation in the media, redemptions have been immaterial — amounting to less than 10 percent of our capital base,” the fund said in letter that it sent to clients on Thursday.

Reuters obtained a copy of the letter.

Level Global, which manages about $3 billion in assets, has been hit by speculation that it may be the hedge fund described in the government’s latest charges which were unveiled on Thursday.

“As you can appreciate, we simply cannot respond to every rumor circulating in the media,” Level Global said in the letter. “We can, however, reiterate what we have already said — that we are not a target of the government’s investigation and that we are cooperating fully.”

The New York-based firm, run by David Ganek and Anthony Chiasson, was raided by Federal Bureau of Investigation agents late last month and has since been the subject of rumors that its employees may have improperly received non-public information about certain technology companies.

The U.S. government on Thursday arrested four men and charged them with illegally passing on earnings data and other non-public details about several technology companies, including chip maker Advanced Micro Devices Inc and computer maker Apple Inc (Read more about Apple stock future.).

Three of the men were employed by technology companies but worked as consultants for expert networking firm Primary Global Research where the fourth man worked as an executive.

Expert networking firms match up investors with consultants for a fee and the government said the consultants in this case were paid more than $400,000.

Like thousands of other hedge funds, Level Global uses expert networking firms to help its portfolio managers and analysts conduct stock research.

Indeed Level Global co-founder Anthony Chiasson was an addressee in an email that research analyst John Kinnucan, who runs Broadband Research, sent to all of his clients alerting them that FBI agents had tried to get him to wear a wire and entrap one of his contacts, whom he didn’t name.

FBI agents recorded many of the conversations between the men arrested on Thursday and unnamed investors, the government’s complaint says.

In another case, FBI agents arrested French physician Yves Benhamou, who was working for another expert networking firm, in November and charged that he illegally passed non-public information about a clinical trial at Human Genome Sciences to hedge fund manager Joseph “Chip” Skowron. Skowron was the senior portfolio manager at FrontPoint Partners healthcare fund.

Alarmed by the news, investors immediately demanded that the firm return nearly half of the healthcare fund’s roughly $1.5 billion in assets. The firm then decided to liquidate the entire portfolio and laid off everyone, including Skowron, who worked on it.

(Reporting by Svea Herbst-Bayliss; Editing by Richard Chang)

Level Global: No race for exits, not U.S. probe target