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Diamondback Capital Says The FBI Is NOT After Them, Just One Of Their Employees

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Great news, Diamondback investors: your money has (mostly) not been tainted.

Last Monday, Diamondback Capital was the first hedge fund to be raid by the feds as part of the government's Insider Trading Fest(ivus) 2010. Today clients were told that everything is cool. The FBI isn't really looking to nail the fund, just have a little chat with one of its traders, who's been asked not to come in for a while. Co-chief investment officers Richard Schimel and Lawrence Sapanski knew this last week but figured they'd save the good news for a few days. Keep everyone on their toes.

Dimaondback told investors in a letter Monday that it had put one of its employees on leave after receiving a subpoena for information on its trading and research activities. Diamondback said in the letter, "We were informed just before the holiday that Diamondback Capital Management, LLC is NOT a target of the government's investigation."

Diamondback, based in Stamford, Conn., said the search warrant, executed by FBI agents, appeared to be focused on a portfolio manager and a former employee who reported to that person. Neither of them was identified. The company said in the letter, written by Diamondback's co-chief investment officers Richard Schimel and Lawrence Sapanski, that it would not provide any additional details.

Diamondback Says Its Not Target Of FBI Probe [Reuters]