As if Saturday's Wall Street Journal article about how the feds are readying insider trading charges (which "could ensnare consultants, investment bankers, hedge-fund and mutual-fund traders, and analysts across the nation") wasn't warning enough! Today, the FBI raided three hedge funds—the Connecticut offices of Diamondback Capital Management LLC and Level Global Investors LP and Boston-based Loch Capital Management LLC. The FBI simply said, "The FBI is executing court-authorized search warrants in an ongoing investigation."

Diamondback and Level Global were started by former managers at the hedge fund SAC, run by Steve Cohen; Loch is run by a pair of brothers who are "acquaintances with Steven Fortuna, a hedge-fund manager who pleaded guilty in the Galleon case and agreed to cooperate in that ongoing investigation." Diamondback and Loch declined to comment or weren't available, while a Level Global told the WSJ, "We can confirm that agents from the Federal Bureau of Investigations visited our offices this morning as part of what we believe to be a broader investigation of the financial services industry discussed in media reports over the weekend. We are cooperating fully with the authorities and, at the same time, we are fully operational and continue to work diligently for the benefit of our investors."

The SAC connection is interesting, because another WSJ feature says that the FBI wanted a Portland, OR-based independent analyst to wear a wire during his conversations with SAC managers: "John Kinnucan says he was sipping wine on his front porch in Portland, Ore., on Oct. 25 when a gray sedan pulled up and two men in business suits jumped out, identifying themselves as FBI agents... At the age of 28, Mr. Kinnucan was hit by a bus while jogging in Florida, suffering four broken bones, two collapsed lungs, a lacerated liver and internal bleeding. When the FBI visited, he says, 'I just thought about being under that bus and knowing you have to keep fighting.' Mr. Kinnucan says that after the two agents confronted him on his porch, he invited them into his kitchen. 'It felt like a street mugging,' he says. 'They were hammering me from either side.'"