On February 18, 2010, Balkany was arrested and charged with extortion, blackmail, wire fraud and making false statements in a Federal Court in Manhattan. The hedge fund involved was SAC Capital. Balkany received two checks totalling $3.25 million and was arrested shortly after. The complaint filed reported that he claimed that he could prevent a federal prisoner from telling U.S. authorities about alleged insider trading at the firm. According to court records, Balkany told an investigator with U.S. Attorney Preet Bharara′s Manhattan office in a conversation recorded by prosecutors, that SAC had inside tips about two companies which make medical devices and a company which makes molecular diagnostic products. SAC, which has since been riddled with insider trading convictions, had a SAC lawyer alerted prosecutors to the extortion attempt, and a prosecutor said during the trial that Balkany "lied" and that there was no evidence of illegal trades. This was later proven untrue. SAC was involved in multi insider trading convictions and investigations. In February 2011, two former employees were charged with insider trading.