FBI agents arrested former SAC Capital Advisors portfolio manager Michael Steinberg on Friday morning following an investigation into insider trading, an FBI spokesman told CNBC.
Details of the charges will be made public later on Friday. A spokesman for the SAC was not immediately available for comment.
Barry Berke, attorney for Steinberg, told CNBC that the former SAC portfolio manager had done "absolutely nothing wrong".
"At all times, his trading decisions were based on detailed analysis as well as information he understood had been properly obtained through the types of channels that institutional investors rely upon on a daily basis. Caught in the crossfire of aggressive investigations of others, there is no basis for even the slightest blemish on his spotless reputation," he said in a statement.
Steinberg, 40, is the most senior SAC Capital Advisors employee to be charged in the U.S. government's probe into how hedge funds may use illegally obtained information to trade. Including Steinberg, nine people have been either charged or implicated with wrongful trading while they were employed at the Stamford, Connecticut-headquartered SAC.
Steinberg's arrest had been widely expected after Jon Horvath, a former SAC analyst who worked closely with him, pleaded guilty last year to using illegally obtained information to trade in Dell and Nvidia Corp. Horvath has been cooperating with the government and had implicated Steinberg.
SAC Capital suspended Steinberg from his post in October 2012, and he has been moving among several hotels in New York City in recent weeks, according to Reuters sources, as he wanted to avoid being arrested at his Upper East Side home where he lives with his wife and two children.
The arrest comes two weeks after SAC agreed to pay a record $616 million to the U.S. Securities and Exchange Commission to settle civil charges of insider trading. SAC neither admitted nor denied wrongdoing at that time.
But the government made clear that that settlement did not preclude further charges.
As part of that settlement, SAC Capital agreed to pay $14 million to settle charges of improper trading in Dell, in which a former trader who reported to Steinberg had been involved.
Reuters contributed to this report.