UPDATE: Hedge Fund Managers Barai, Longueuil Destroyed Evidence, FBI Says

Feb 8 2011 | 12:55pm ET

Hedge fund managers Samir Barai and Donald Longueuil attempted to cover up their insider trading in the wake of the public disclosure of the Justice Department's investigation, prosecutors and the Federal Bureau of Investigation said.

In addition to conspiracy and securities fraud charges, the two have also been charged with obstruction of justice.

At a press conference today, the Justice Dept. and FBI revealed that they have evidence that Barai and Longueuil sought to destroy records and documents after Barai Capital was raided in November. Among the evidence they allegedly sought to destroy were records of their receipt of inside information and their sharing it with Noah Freeman, a former SAC fund manager.

Criminal charges against four people were unsealed today, including Barai, of Barai Capital Management, and Longueuil, formerly of SAC Capital Advisors. In addition, the Securities and Exchange Commission announced civil charges against the four men, alleging they earned more than $30 million from their illict trading.

The other two men charged and sued by the SEC are Freeman and Jason Pflaum, a former technology analyst at Barai Capital. Both men have pleaded guilty and are cooperating with the investigation.

Barai and Longueuil are set to make their initial appearance in Manhattan federal court today. The former turned himself in this morning, while the latter was arrested at his New York home.

"It is illegal for company insiders who moonlight as consultants to sell confidential information about their companies to traders, and it is equally illegal to buy that corruptly obtained information and trade on it,” said Robert Khuzami, the SEC's enforcement chief, said. “Instead of competing on a level playing field with other investors, these hedge fund managers sought to illegally trade today on what others would not learn until tomorrow."

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