Think of hedge fund hubs in the United States, and the names that tend to come to mind are New York and Greenwich, Connecticut. Yet when it comes to a major U.S. insider trading investigation, Boston is taking center stage.

A number of the traders and analysts drawing scrutiny in the more than two-year-old probe into improper trading in mainly technology stocks either work in Boston, or have long-standing ties to New England's largest city.

The series of Boston connections that keep cropping up in the probe is no mere coincidence, said people familiar with the inquiry.

These sources, who could not be identified because much of the investigation is not public, said Boston figures prominently in the investigation because it is home to many tech-focused hedge funds like Loch Capital, a firm recently raided by the U.S. Federal Bureau of Investigation.

A portfolio manager suspended from Diamondback Capital Management shortly after it also was raided by the FBI on November 22 also has a Boston connection, said people who declined to be identified because the hedge fund has not identified the employee.

The tech-focused portfolio manager had previously worked for years at a large hedge fund in Boston -- a university town that has a reputation as an incubator for tech companies -- before joining Stamford, Connecticut-based Diamondback.

Securities experts say prosecutors and regulators often look for patterns of behavior in which traders and analysts know each other and also trade in similar stocks.

Meanwhile, there are indications the investigation is heating up. The cable business news network CNBC, without citing sources, said federal authorities could begin making arrests as soon as next week. Reuters has previously reported arrests are likely by year's end.

FORTUNA CONNECTION

Boston's ties to the multi-pronged insider trading investigation -- which started with the high-profile arrest of Galleon management co-founder Raj Rajaratnam but has now morphed into a probe largely focusing on so-called expert network firms and their clients -- are not entirely new.

Last year, Steven Fortuna, the Boston-based co-founder of hedge fund S2 Capital, pleaded guilty to insider trading charges in the massive probe that led to the Galleon charges.

Fortuna, who is cooperating with the Galleon investigation, was close friends with Timothy and Todd McSweeney, the brothers who run Loch Capital. Reuters previously reported that last winter many investors pulled money from the McSweeneys' one-time $2 billion fund because of the brothers' friendship with Fortuna.

Loch Capital said in a statement earlier this week that neither the hedge fund nor the McSweeneys are a target of the investigation.

A spokesman for Diamondback declined to comment on the employee, whose suspension has previously been disclosed. The firm previously has said it is not a target of the probe.

Federal authorities also are scrutinizing a former analyst with Balyasny Asset Management's Boston office who is suspected of passing on insider information to Fortuna, said people familiar with the investigation.

Balyasny, whose main office is in Chicago, is one of roughly 20 hedge funds, mutual funds, consulting firms and individuals that have received a subpoena from federal prosecutors over the past few weeks, sources have confirmed.

Additionally, Wellington Asset Management, a big mutual fund firm that received a subpoena in connection with the probe, is based in Boston.

Balyasny has not commented on the subpoena but in communications with its investors, the hedge fund has said it has cooperated with authorities and found nothing improper in any trading. Wellington has said it is not a target of the inquiry.

To some degree, it makes sense that Boston would figure prominently in the insider trading investigation given the city's tech pedigree. The Boston area is home to Massachusetts Institute of Technology and tech companies like EMC and Akamai Technologies.

Boston, more than some other large cities like New York, tends to foster close relationships because it is smaller and most hedge funds are within a few blocks' radius of each other.

It tends to be easier to have close networks in Boston than in other large cities, said Brad Balter, managing partner of Balter Capital Management, a Boston-based investment adviser that invests in hedge funds. Everyone knows everyone else in the industry here and cliques form easily.

Some of the more than 50 people who received an email in October from an independent research consultant, alerting them of the FBI's interest in him, work for hedge funds or mutual funds in Boston.

The email sent by John Kinnucan, the principal of Broadband Research, who specializes in gathering sales information from technology companies, created a stir on Wall Street.

Many of the hedge funds and mutual funds that Kinnucan did work for, SAC Capital Advisors, Wellington, Citadel and Janus , have gotten subpoenas from prosecutors. Two of the people Kinnucan sent his email to at SAC Capital, the $12 billion hedge fund firm led by Steve Cohen, work in the fund's Boston office.

SAC Capital's Boston office is located in the same building as Sonar Capital, a small tech-focused tech hedge fund, which also had contact with Kinnucan, according to a list of email recipients.

Last week prosecutors served a subpoena on Kinnucan. The Wall Street Journal has reported that two FBI agents asked him to surreptitiously tape his phone conversations with an SAC Capital trader located in New York. But Kinnucan, in a phone call on Thursday, disputed that account and said authorities never asked him to tape calls with anyone from SAC Capital.

He declined to identify the fund with which the FBI wanted him to tape his phone calls. An SAC Capital spokesman declined to comment.

(Reported by Matthew Goldstein and Seva Herbst-Bayliss, editing by Matthew Lewis)