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Prosecutors on Tuesday accused the two former employees, among four new defendants charged with insider trading, with receiving corporate secrets while working at SAC. The firm itself has not been charged with any wrongdoing.

The government has been investigating current and former SAC employees, sources have told Reuters, since prosecutors announced a huge insider trading case involving Galleon Group hedge fund founder Raj Rajaratnam in October 2009.

A number of SAC's former analysts and traders were questioned over the course of the Galleon investigation, but none had been charged in that case for their activities at the Stamford, Connecticut-based fund.

The latest charges were announced by federal prosecutors investigating ties between hedge funds and consultants for so-called expert networking firms -- businesses that match hedge funds seeking information with industry consultants.

One of the former SAC employees, Noah Freeman, agreed to plead guilty and is cooperating with the investigation, prosecutors announced Tuesday. Freeman's lawyer, Ben Rosenberg of Dechert LLP, did not return calls seeking comment.

The other former SAC employee, Donald Longueuil, was arrested Tuesday morning at his Manhattan home on charges of conspiracy and obstruction of justice.

During a brief appearance in U.S. District Court in New York, a magistrate judge approved Longueuil's release on $1.5 million bond. His lawyer, Craig Carpenito of Alston & Bird LLP, declined to comment.

SAC said it is cooperating with the government probe. A spokesman for Cohen said the high-profile hedge fund manager was "outraged by the alleged actions of two former employees" and noted SAC had fired both Freeman and Longueuil in 2010.

The government announced charges on Tuesday against two others: hedge fund manager Samir Barai and an analyst who worked at his fund, Jason Pflaum.

Barai, a former Citigroup hedge fund manager who left to launch Barai Capital Management, surrendered to FBI agents. A judge permitted his release on $1 million bond. Barai's lawyer, Evan Barr of Steptoe & Johnson LLP, declined to comment.

Pflaum has agreed to plead guilty and like Freeman is cooperating with the investigation. Pflaum's lawyer, Michael Grudberg of Stillman, Friedman and Shechtman PC, declined to comment.

Since November, prosecutors have charged more than a dozen people in this newest crackdown on insider trading in the $1.9 trillion hedge fund industry.

Tuesday's charges mark the expansion of the probe beyond expert networking firm consultants and employees to hedge fund employees suspected of receiving secret tips on technology stocks.

'VERGING ON CORRUPT BUSINESS MODEL'

The findings vindicated Toyota's position that it had identified and fixed the only known safety problems with popular vehicles like the Camry by focusing on mechanical issues with accelerator pedals and the risk that floormats could trap the pedal in the open position.

"There is no electronic-based cause for unintended high-speed acceleration in Toyotas," U.S. Transportation Secretary Ray LaHood said in a statement on Tuesday.

Toyota's U.S.-traded shares closed 4 percent higher, buoyed by the government findings and the automaker's smaller than expected dip in quarterly earnings and higher sales forecast.

The probe by National Highway Traffic Safety Administration and NASA engineers followed questions by some safety advocates and lawmakers about whether software-driven throttles and flaws with electronic control systems had also played a role in unintended acceleration complaints.

Investigators concluded that most reports of runaway acceleration could be explained by driver error.

"What mostly likely happened was pedal misapplication. The driver stepped on the gas instead of the brake, or in addition to the brake," said Ronald Medford, NHTSA's deputy administrator.

Steve St. Angelo, a Toyota executive tasked with shoring up quality after last year's recalls, said the automaker hoped the study would "put to rest unsupported speculation" about the safety of Toyota's electronics.

"We believe this rigorous scientific analysis by some of America's foremost engineers should further reinforce confidence in the safety of Toyota and Lexus vehicles," he said in a statement.

LaHood, who had touched off a panic a year ago by urging Toyota owners with concerns to stop driving them, offered a blanket endorsement on Tuesday.

"We feel Toyota vehicles are safe to drive," LaHood said, adding that he recommended to his daughter that she buy a Sienna minivan after she sought his opinion.

WINNING BACK CUSTOMERS

Although Toyota has cleared a major hurdle in its ongoing safety saga, analysts cautioned that it would still struggle to win back American consumers who have defected from the brand and its luxury counterpart Lexus.

Toyota lost ground in the U.S. market in 2010, its market share fell from 17 percent at the end of 2009 to just over 15 percent in December.

"This is certainly going to help Toyota, but it doesn't change the fact that they let these other issues through," said TrueCar.com analyst Jesse Toprak. "They're still going to face difficulties to bring people back to Toyota."

The Big Board parent is banking on a nascent U.S. futures business, hefty investments in technology, and an economic rebound to reverse a decline in global trading that drove its fourth-quarter profits down 21 percent.

Chief Executive Duncan Niederauer, speaking on a conference call with analysts and media, said 2011 "should provide a better environment for doing business," citing a return of investor confidence and healthier corporate balance sheets.

The fourth-quarter results, reported Tuesday, narrowly beat analysts' expectations and the company's shares slipped, underlining some of the possible pitfalls ahead as NYSE Euronext heads into uncharted terrain.

"The biggest wild card is probably the economic activity in Europe, and also volatility," said Chris Allen, analyst at Evercore Partners. "It's the slow economic activity and slow volatility world that would be the worst case scenario from a trading perspective."

NYSE Euronext's full-year profit, after dropping 31 percent in 2009, rose 3 percent in 2010. It is expected to rise 19 percent in 2011 and 18 percent in 2012, according to Thomson Reuters I/B/E/S.

"If people have been impatient waiting for the progress, now we're starting to see some of that," said Allen. "The real big payoff will be in 2011 and into 2012."

The transatlantic exchange group said it expects trading to rebound as the global economy recovers this year, and it projected slightly lower costs.

The company aims to tackle Chicago-based futures giant CME Group Inc (CME.O) head on in a matter of weeks with a new U.S. interest-rate futures exchange and clearinghouse, and hopes to attract more high-frequency trading (HFT) firms with new data centers near New York and London.

The initiatives should drive growth in 2011, NYSE Euronext said, and are part of its battle against trading rivals that have steadily eroded its dominant position in the core U.S. and European markets in recent years.

The company is at the tail end of combining several venues, data centers and asset classes that came together in the blockbuster 2007 merger of NYSE Group and Euronext.

Weak trading of U.S. stocks and European derivatives drove fourth-quarter profits down to $120 million from $151 million a year earlier. Revenue fell 4 percent to $613 million.

The company earned 46 cents per share, 3 cents above analysts' average forecast, according to I/B/E/S.

NYSE Euronext shares were off 1 percent at $33.41 in afternoon trade in New York on Tuesday, giving back some of Monday's gains. The Paris-based shares slid 1.4 percent to 24.18 euros.

A NEW LIFFE IS BORN

The encouraging result for Toyota stems from a 10-month probe ordered by Congress following recalls of nearly 8 million of its best-selling models in the United States over defective floor mats and accelerator pedals that hurt its reputation for quality.

Some safety advocates and congressional investigators questioned whether software-driven throttles also played a role in unintended acceleration complaints.

"There is no electronic-based cause for unintended high-speed acceleration in Toyotas," U.S. Transportation Secretary Ray LaHood said in a statement.

Toyota's U.S.-traded shares were up 4 percent in afternoon trade on the New York Stock Exchange, shortly after the release of the findings.

Although Toyota has cleared a major hurdle in its ongoing safety saga, regulators said they would consider imposing requirements for all vehicles to have braking systems that automatically counteract any instances of unintended acceleration.

Toyota, which has put electronically controlled throttles in its vehicles since 2002, has consistently said those systems were safe.

The probe by National Highway Traffic Safety Administration and NASA engineers found that the only causes of the unwanted acceleration were the previously identified sticking accelerator pedals and loose floormats that could jam the pedals.

Those problems were the root of massive recalls in 2009 and 2010 that created a safety crisis that rocked Toyota to its foundations.

Regulators are looking into 89 deaths that may be associated with sudden acceleration in Toyota and Lexus vehicles but have so far linked only a handful to the floor mat problem.

Although the investigation turned up no flaws that would prompt another massive recall, Toyota still faces significant risks from scores of civil lawsuits stemming from the recalls.

Those cases in federal and state courts, which may turn on the timing of company disclosures to regulators of already established defects, have an estimated potential liability of up to $10 billion.

(Reporting by John Crawley and David Lawder; Editing by Tim Dobbyn)

The charges mark the latest development in a broad probe of hedge funds' trading activities. Authorities had previously brought criminal charges against eight people tied to a so-called expert networking firm who are accused of improperly leaking confidential corporate information to hedge funds. Tuesday's charges are the first against hedge fund managers in the probe.

The U.S. Attorney in Manhattan said a press conference would be held at noon to announce the charges. FBI and U.S. Securities and Exchange Commission officials were also scheduled to attend.

Hedge fund manager Sam Barai, head of Barai Capital Management, has surrendered to authorities in connection with the case, a person familiar with the situation said. The person was not authorized to discuss the case publicly.

Barai, a former hedge fund managing director at Citigroup's Tribeca Global Management, launched Barai Capital Management in 2008. The fund, which focuses on technology and media companies, is in the process of closing.

Barai's fund was one of four raided by federal agents late last year when the trading probe was heating up. The raids shocked the $1.9 trillion hedge fund world, and were followed by dozen of subpoenas to hedge funds and mutual funds that did business with various expert network firms and consultants.

Another hedge fund manager also was arrested Tuesday in Manhattan in connection with the case, an FBI source said.

The Wall Street Journal reported Tuesday that charges also were to be unsealed against Jason Pflaum, a technology analyst. He could not immediately be reached for comment.

Other defendants' names were not immediately available. Prosecutors said two of the portfolio managers would also be charged with obstruction of justice.

The U.S. Attorney's office and the SEC declined to comment.

(Additional reporting by Martha Graybow, Jonathan Stempel, Emily Chasan and Svea Herbst-Bayliss; Editing by John Wallace and Derek Caney)