After last December’s revelation that the Office of the United States Attorneys had subpoenaed Level Global Investors as part of a widening insider trading probe, the New York hedge fund quickly did some damage control. The $4 billion firm — founded in 2003 by Anthony Chiasson and David Ganek, alumni of Steven Cohen’s SAC Capital Advisors — fired off a reassuring letter to investors.
“The Investment Manager and the Level Funds have professional liability insurance which we expect will cover our legal costs and expenses,” wrote Ganek, who, like Cohen, has used his wealth to build a lavish art collection.
In February, Level Global announced that it was shutting down; although his firm hasn’t been charged, Ganek found the investigation too distracting. The case highlights the growing role that insurance plays in shielding hedge funds, and their clients, from potential legal bills and in forestalling investor redemptions.....