The government's huge investigation into Wall Street insider trading appears to be aimed at Steven Cohen's SAC Capital - and other institutional targets.  Last month, the FBI accosted an independent research analyst on the porch of his house and threatened to arrest him unless he he wore a wire and helped try and trap a trader at SAC, reported Henry Blodget.  That analyst was John Kinnucan, who refused to help, then alerted all his clients by email - including SAC, Jennison, Wellington, MFS, Citadel, and Maverick - about what happened. 

"Today two fresh faced eager beavers from the FBI showed up unannounced (obviously) on my doorstep thoroughly convinced that my clients have been trading on copious inside information.  (They obviously have been recording my cell phone conversations for quite some time, with what motivation I have no idea.) We obviously beg to differ, so have therefore declined the young gentleman's gracious offer to wear a wire and therefore ensnare you in their devious web."

In Mr. Blodget's words, SAC Capital is a "giant, wildly successful hedge fund" that, like a handful of other institutions, has long had amazing information about the companies whose stocks it trades, ..." It's this superior information that the government's new investigation appears to be targeting.  In so doing, it may "ensnare" many of Wall Street's most successful institutions, including clients named above, and Goldman Sachs.  In the end, Mr. Blodget suspects the investigation could have a huge impact on the way top institutional investors gather and use information. 

And then, there's still the investigation of the Galleon hedge fund, that brought down one of Wall Street's most famous investors - Raj Rajaratnam, who's fighting the charges.  Already 14 have pleaded guilty in this case.  [Business Insider, 11/21]