7 charged in $78M record-setting inside trade case

FBI agent David Makol said in court papers that the government built its case through information provided by the three cooperators, consensually recorded conversations, court-authorized wiretaps, telephone records, trading records, electronic communications, documents provided by a cooperator and other documents obtained from two hedge funds. The hedge funds were not identified in court papers.

Messages seeking comment left with lawyers for the other defendants were not immediately returned.

In a letter to investors, Diamondback Advisors co-chief investment officers Richard Schimel and Larry Sapanski called the actions by prosecutors and the SEC "an important step towards putting this matter behind us."

The company has fully cooperated with authorities since learning of the inquiry and believed the "fruits of that cooperation" were reflected in the charges announced Wednesday, they said. Newman was placed on leave immediately after the Nov. 22, 2010, search, and Tortora resigned from the firm in April 2010, they added.

Associated Press writers Mark Pratt in Boston and Marcy Gordon in Washington contributed to this report.