A powerful Republican lawmaker is investigating possible insider trading at SAC Capital Advisors LLP, highlighting increased public scrutiny of potential wrongdoing by hedge funds.

The Financial Industry Regulatory Authority last week provided Senate Judiciary Committee head Charles Grassley with about 20 instances of suspicious trading at the hedge fund, a spokeswoman for the senator confirmed on Saturday.

Grassley had asked Finra in April for information on any such trading at Steven Cohen's $13 billion hedge fund.

It was not clear if the trades had been referred to the Securities and Exchange Commission's enforcement staff, and authorities have not alleged wrongdoing by SAC or Cohen.

The government has been investigating current and former SAC employees since U.S. prosecutors announced a huge insider trading case involving the Galleon Group in October 2009. SAC Capital employees Donald Longueuil and Noah Freeman have pleaded guilty to charges.

Earlier this month Galleon Group founder Raj Rajaratnam was convicted on insider trading charges in a sweeping government victory in the case.

Court filings also show prosecutors are investigating trade accounts at SAC, including one tied to Cohen, SAC Capital's founder.

SAC representatives and congressional investigators met in Washington on May 10 to discuss possible suspicious trades, according to the Wall Street Journal, which earlier reported Grassley's receipt of information from Finra.

At the meeting, SAC representatives suggested the investigators go easy on the hedge fund, saying it has internal procedures to track down and prevent illegal trading, according to the Wall Street Journal report.

Also at the meeting, SAC Capital's Washington-based policy adviser Michael Sullivan cited Cohen's civic-minded interest in purchasing a stake in the New York Mets baseball team, the report said.

We welcomed the opportunity to meet with the staff to educate them about the firm and our compliance efforts, and had an entirely appropriate, professional and cordial meeting, said SAC Capital spokesman Jonathan Gasthalter. We will continue to cooperate in any way we can.

(Reporting by Ann Saphir with reporting by Matt Goldstein; editing by Christopher Wilson)

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