Federal prosecutors today announced the arrests of 3 hedge fund portfolio managers and 1 hedge fund analyst, on insider trading charges.  As of 9 a.m., two pled guilty, one was arrested, and the 4th surrendered to authorities. Arrested:  (i) Donald Longeuil;  (ii) Samir Barai;  (iii) Jason Pflaum;  (iv) Noah Freeman. [See details below]

Donald Longeuil, HF manager.  Former managing director at a CT-based hedge fund, he caused his hedge fund to trade on the inside information.  Freeman also obtained inside information about another technology company and caused his hedge fund to trade on the nonpublic information.  Was arrested at his Manhattan residence early Tuesday morning.

Samir Barai, HF manager.  Founder and portfolio manager of Barai Capital Management, obtained inside information about several technology firms from company insiders, and then traded on the inside information on behalf of Barai Capital.  In November, the FBI searched the offices of Barai Capital.  He surrendered.

Jason Pflaum, HF analyst.  Former technology analyst at Barai Capital Management, obtained inside information about technology companies and shared it with Barai.  After Pflaum shared the confidential information with him, Barai used it to illegally trade on behalf of Barai Capital.  Pflaum, who's presently being charged, is a cooperating witness.

Noah Freeman, HF manager. Hedge fund manager at SAC Capital from 2008 until early 2010;  he previously was an analyst at Sonar Capital Mgmt in Boston. Freeman obtained inside information regarding Marvell and shared it with NY-based Donald Longueuil.

U.S. Attorney Preet Bharara in Manhattan has spearheaded the government’s inquiry, which has used unprecedented investigatory tactics to pursue their cases.  Much of the evidence that federal prosecutors have used came from wiretapping the phones of traders and analysts. 

Of course, the centerpiece of this investigation is the prosecution of billionaire money manager Raj Rajaratnam - who co-founded the Galleon Group hedge fund.  Since Mr. Rajaratnam's arrest in October 2009, at least 42 individuals have been charged with insider-trading crimes - 27 of the 42 have pleaded guilty.

    Credits to these Regulators.   In addition to Mr. Bharara, Janice Fedarcyk (Asst Director-in-Charge of FBI's NY office);  Robert Khuzami (SEC Enforcement Division Chief).  [NYT Dealbook, 2/8]

    SEC Staff Regulators.  Sanjay Wadhwa, Jason Friedman, Joseph Sansone, Daniel Marcus (all in SEC's NY Market Abuse Unit) did the investigation with Matthew Watkins, Neil Hendelman, Diego Brucculeri, James D’Avino (NY Regional Office).  SEC litigation will be led by Valerie Szczepanik, Kevin McGrath. 

For further details, go to:   [SEC PR 11-40, 2/8]