Former fund manager Ganek says insider trading raid 'rerouted' careers of dozens

September 13, 2016 6:29 PM EDT

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By Svea Herbst-Bayliss

BOSTON (Reuters) - David Ganek, whose hedge fund shut after federal agents searched its offices five years ago, said on Tuesday that the U.S. government's raid "rerouted" the careers of six dozen people and that he is suing the government to fight for accountability.

"This case is sorely in need of disclosure of facts. How did this happen and why did this happen," Ganek said at the CNBC Institutional Investor Delivering Alpha conference on Tuesday.

Ganek was speaking publicly for the first time since filing a lawsuit that charges the U.S. government relied on materially false information to get the search warrant that led to a raid at hedge fund Level Global, which once managed $4 billion.

Level Global was founded by Ganek and Anthony Chiasson in 2003 and closed in 2011, just months after it and three other firms were searched by Federal Bureau of Investigation agents as prosecutors investigated whether hedge fund managers were relying on illegally obtained insider information to make trades.

Both Ganek and Chiasson had once worked for Steven A. Cohen, whose firm SAC Capital Advisors pleaded guilty to insider trading in 2013.

Ganek was never charged with any wrongdoing. Chiasson was exonerated after initially being found guilty of insider trading. But for Ganek the anger runs deep, he said.

"The second the FBI came off the elevator it was an investigation, a trial, and a conviction all in one. 70 peoples' careers were rerouted," Ganek said, adding "It didn't need to be that way - so yes, there's a component that's personal."

When Ganek closed the firm, he said many of his former employees were tainted by having worked for him.

Ganek's legal team includes prominent litigator Barry Scheck, who has spent years working to exonerate wrongly convicted people. Scheck's Innocence Project is not known for working with hedge fund managers.

After being told by friends, investors and some lawyers, that it would be difficult and time consuming to sue Preet Bharara, the U.S. Attorney in Manhattan, other federal prosecutors and some FBI agents, Ganek said he nonetheless decided to move ahead to shed light on what he charges was the government's false information.

"There is a deterrence here that can lead to a lot of good," he said.

(Reporting by Svea Herbst-Bayliss; Editing by Bernard Orr)

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