Advisory industry, clients spooked by subpoena of Wellington

The Vanguard Group Inc. is trying to allay investor concerns about the news that one of its subadvisers, Wellington Management Inc., has been subpoenaed by federal authorities in connection with an insider-trading probe.

On Saturday, The Wall Street Journal reported that the Securities and Exchange Commission, the FBI and the New York Attorney General's Office are conducting criminal and civil probes into possible insider trading at a number of companies. Specifically, investigators are looking at whether traders at various financial services firms received non-public information from expert networks and third-party research firmsincrease.

On Monday, the FBI agents raided the Connecticut offices of hedge funds Diamondback Capital Management LLC and Level Global Investors LP as part of the investigation.

Wellington, Janus Capital Group Inc. and hedge fund SAC Capital Advisors LP have received subpoenas connected to the investigation.

Don Chu, a consultant with Primary Global Research LLC, a Mountainview, Calif.-based expert research network, was arrested on Wednesday morning on insider-trading charges.

Everyone in the industry is incredibly nervous about the insider-trading probe, observers said.

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Advisory industry, clients spooked by subpoena of Wellington