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Diamondback Portfolio Manager on Leave

The hedge fund told clients it was subject to an FBI raid but focus is on research analyst.

Diamondback Capital, one of trio of hedge funds raided by the FBI last month as part of a insider trading probe, told clients that a portfolio manager is now on leave.

According to The Financial Times, the company sent a letter to investors stating that it had been informed by the government that the fund "is not a target of the government's investigation."

The letter states, "Diamondback is not alleged to have engaged in any misconduct or wrongdoing."

In the letter, Diamondback said it had been served with a search warrant and received a grand jury subpoena seeking a broad range of information connected to the group's trading and research activities.

"The warrant appears to be focused on a single employee (a portfolio manager), as well as on a former employee who reported to that employee," Diamondback co-founders Lawrence Sapanski and Rich Schimel said in the letter. "One of the principal areas on which the government appears to be focused is the use of industry research consultants."

In the letter, the Diamondback founders said that the subpoena is similar to those received by other financial services firms, and that they are fully co-operating with the government probe. Phil Albinus is the former editor-in-chief of Advanced Trading. He has nearly two decades of journalism experience and has been covering financial technology and regulation for nine years. Before joining Advanced Trading, he served as editor of Waters, a monthly trade journal ... View Full Bio

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