Updated

Federal investigators have turned up the heat on Wall Street, raiding three hedge funds in what one of the targets called a wide-ranging probe of insider trading.

The FBI on Monday searched the New York offices of Level Global Investors LP, and the Stamford, Connecticut, headquarters of Diamondback Capital Management LLC, a law enforcement official said. The official spoke on condition of anonymity because he was not authorized to discuss an ongoing case.

Another FBI official said the agency also searched a third site, at 30 Federal St. in Boston. Hedge fund Loch Capital Management LLC has its headquarters at that address.

The FBI said in a statement that it had executed search warrants in the three states "in an ongoing investigation." Agency spokesmen said they could not comment further because the court documents are under seal.

A spokesman for Level Global acknowledged the raid took place.

"We can confirm that agents from the Federal Bureau of Investigation visited our offices this morning as part of what we believe to be a broader investigation," the spokesman said in a statement.

Four men wearing overcoats and badges emerged late Monday from the Level Global offices in midtown Manhattan, pulling rolling suitcases behind them and carrying nylon backpacks. They declined to answer reporters' questions.

In Stamford, security guards ordered journalists to leave the premises of the high-rise building housing the offices of Diamond Capital Management. Three men were seen leaving the building in an FBI vehicle on Monday evening.

The raids rattled Wall Street and bank shares slumped Monday as news of FBI action spread. Goldman Sachs Group Inc. sank 3.4 percent, while Bank of America Corp. fell 3.1 percent. Several white-collar defense lawyers in New York said they were bombarded by calls from traders seeking representation.

The FBI and other law enforcement agencies are investigating insider trading by hedge funds, mutual funds and investment bankers, the Wall Street Journal reported this weekend. The companies allegedly earned tens of millions in illegal profits using secret information about mergers, according to the Journal.

Diamondback and Level Global both are run by former managers of SAC Capital Advisors LP, of Stamford. Diamondback manages about $4.71 billion, according to public filings. Level Global manages $3.09 billion, filings show.

Loch Capital is run by brothers Timothy and Todd McSweeney. The brothers have been linked in news reports to hedge-fund manager Steven Fortuna. Fortuna pleaded guilty last year to charges stemming from an earlier insider trading investigation by the Securities and Exchange Commission.

Workers at Loch Capital declined to answer calls placed by a reporter through the office building's intercom on Monday. A worker at the building who declined to be identified said the McSweeney brothers left their offices at around noon and did not return.

The raids come a month after U.S. Attorney Preet Bharara in Manhattan told the New York City Bar Association that white-collar crime was on the rise, carried out by Wall Street heavyweights who consider inside information "a performance enhancing drug that provides the illegal 'edge' to outpace their rivals and make even more money."

Bharara said his office and the FBI had both recently added more resources to exposing insider trading and considered it a top criminal priority.

"Disturbingly, many of the people who are going to such lengths to obtain inside information for a trading advantage are already among the most advantaged, privileged, and wealthy insiders in modern finance," he said last month.

Diamondback portfolio manager Andrea Feinstein declined to comment about the search. A spokesman for the SEC did not respond to requests for comment.

Calls to Loch Capital were not returned. Leonard Pierce, a lawyer for the fund, did not return a call seeking comment.

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Neumeister reported from New York. AP Business Writer Stephen Singer in Hartford, Connecticut, John Christofferson in Stamford, Connecticut, Rodrique Ngowi in Boston, Chris Hawley and Tom Hays in New York and Alicia Caldwell in Washington, contributed to this report.