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Hedge fund paying $9M; won’t be prosecuted

WASHINGTON — A hedge fund named in a massive insider-trading case will pay $9 million in settlements but won’t be prosecuted by the Justice Department because it is cooperating in the government’s investigation.

The Securities and Exchange Commission said Monday that Diamondback Capital Management agreed to pay $3 million fine to settle civil insider-trading charges and it will forfeit $6 million in alleged illegal profits in an agreement with the Justice Department. The department won’t prosecute Diamondback, based in Stamford, Conn., as long as it continues to cooperate.

The government unveiled the case last week, charging a co-founder of hedge fund Level Global Investors with engineering a trade that netted $53 million in profits. The SEC said the case involved closely linked traders at Diamondback and Level Global.