Paranoid Hedge Funds Are Hiring Security Firms To Sweep Their Offices And Homes For Bugs

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In the wake of the massive probe into insider trading at hedge funds, in which feds have been able to level charges against individuals via evidence garnered from wire taps and covert recordings, hedge fund managers are having their offices and homes swept for listening devices, according to the FT.

In the recent arrest of former SAC portfolio manager Don Longeueil, for example, the FBI’s complaint is filled with evidence that came from his ex-best friend, Noah Freeman, who wore a recording device as they chatted about destroying hard drives.

The case against Galleon and Raj Rajaratnam, and consultants at expert network firms, were built using similar tactics.

The FT spoke to several security firms that carry out sweeps for bugs and they all said they’d seen a huge increase in requests for their services by money managers.

The founder of Insite Security, a security and risk management firm based in New York, told the FT,

Over the past six months, there has been a really heightened interest in electronic sweeps for hedge funds. They’re working harder at clamping down on their information security and making sure the telephones are secured and the offices aren’t being bugged. We’ve also been asked to sweep traders’ homes.

That story was echoed by another security firm, called Guidepost Solutions, which has also experienced a spike in calls from hedge funds that have arisen “out of the government’s current investigations.” The head of Guidepost, Andrew O’Connell, said: “The hedge funds calling for these services, which includes sweeps but also compliance guidance, has grown 1000% over the past year.”

Don’t miss the complete guide to every individual implicated in the insider trading investigation >

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