A year after four hedge funds were raided as part of a sweeping probe into insider trading, agents are ready to arrest as many as three people who worked at the raided funds, sources familiar with the investigation said.

These arrests are expected to take place in the coming weeks, and some of the people will plead guilty to charges of insider trading, the sources said.

The sources declined to be named because the impending arrests have not yet been made public.

Speculation has been mounting for weeks that the government was ready to make its next move against people who traded technology stocks at hedge funds Diamondback Capital Management and Level Global Investors, according to people at hedge funds, industry analysts, lawyers and law enforcement officials.

At least one former Level Global worker is cooperating with authorities in the matter, Reuters has learnt.

The arrests would mark the biggest break in months in the government's long-running probe into how investment managers use so-called expert networks to gain a trading edge.

That would expand the list of the roughly 50 people who have been convicted or pleaded guilty in overlapping insider trading probes first unveiled in October 2009.

To date, one-time hedge fund billionaire Raj Rajaratnam is the best-known investor implicated in the probe. He was convicted in May and sentenced to 11 years in prison.

Former Goldman Sachs Group Inc director Rajat Gupta, a former chief of consulting firm McKinsey & Co, has also been charged as part of the probe. He is fighting those charges.

RAIDS

Ever since last year's raids of hedge fund firms, several prominent people have been in limbo.

One is stockpicker Todd Newman, who headed technology trading for Diamondback from Boston. He was placed on a leave of absence last year, and subsequently let go.

Newman could not be reached and a spokesman for Diamondback declined to comment.

Another is Anthony Chiasson who co-founded Level Global with David Ganek and was one of independent researcher John Kinnucan's many contacts.

Kinnucan said that FBI agents approached him last year to wear a wire in order to catch one of his contacts.

Chiasson could not be reached for comment, and his lawyer did not immediately respond to an emailed request for comment.

Of the four firms raided a year ago, three -- Level Global, Loch Capital Management and Barai Capital, either shut down or are shutting down.

Only Diamondback survives, having shrunk by half in the last year as investors pulled money out as the probe's cloud continued to hang over its head.

(Reporting by Svea Herbst-Bayliss in Boston and Katya Wachtel and Jonathan Stempel in New York, Editing by Matthew Goldstein and Muralikumar Anantharaman)