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* Agents building on operation known as "Perfect Hedge"
* "Wall Street" movie star Douglas helps publicize FBI
By Grant McCool
NEW YORK, Feb 27 (Reuters) - The FBI says it has enough informants lined up to keep its investigations of suspected illegal insider trading at hedge funds going for at least five more years.
In a briefing on Monday with reporters at the New York office of the Federal Bureau of Investigation just blocks away from Wall Street, agents who manage squads of investigators likened the probes to penetrating a secret society.
The investigations are building on a mission dubbed "Perfect Hedge" that have led to the prosecutions of multimillionaire Galleon Group hedge fund founder Raj Rajaratnam and dozens of traders, executives and research consultants since late 2009.
"We have cooperators set up for years to come," said David Chaves, a supervisory special agent for securities and commodities fraud investigations.
He told reporters that the informants include cooperating witnesses -- people who have been identified as conducting illegal trading but who have agreed to assist authorities to catch others in the hopes of receiving a lighter sentence -- and sources within hedge funds.
"I don't want to say it's infinite, but clearly in five years we think we will be working it," Chaves said.
The Galleon prosecution and other recent insider-trading cases have used secretly-recorded telephone conversations to gather evidence, an investigatory tool traditionally used in organized crime or narcotics cases.
The use of wiretaps sent a chill through the hedge fund industry closed to outsiders and what the FBI calls "undercover resistant."
Investigators have tracked mobile phone calls, instant messaging and social media to collect evidence.
The FBI says it is alert to new ways in which people may try to exchange information on publicly traded companies to gain an illegal edge.
"We will go to whatever lengths we have to to keep up with changes in technology," said Richard Jacobs, another FBI supervisory special agent for white-collar crime cases.
Both officials emphasized that law enforcement believes that the overwhelming majority of hedge funds and their traders are law-abiding and run their firms responsibly.
A similar briefing was given to reporters in Washington on Monday, where officials discussed the agency's shift in focus of the past 10 years to financial fraud cases involving larger amounts of money than in the past.
For example, out of the 2,600 mortgage fraud investigations open nationally, 70 percent involve more than $1 million, compared with smaller bank frauds under $25,000 that were previously typical of the caseload.
In New York, the FBI said that to date, out of 64 arrests made in "Perfect Hedge," 59 people have been convicted or have pleaded guilty. These prosecutions, in partnership with the office of the Manhattan U.S. Attorney and the U.S. Securities and Exchange Commission, have been an important deterrent, the agents said.
Another tool for deterrence is the publicity the cases have generated in the United States and abroad.
To that end, Michael Douglas, the Academy Award-winning star of the 1987 movie "Wall Street," agreed to a request from the FBI to record a public service announcement.
"In the movie 'Wall Street' I played Gordon Gekko, who cheated to profit while innocent investors lost their savings," Douglas, 67, says in the video recording released on Monday.
"The movie was fiction but the problem is real," Douglas says in the video. "Our economy is increasingly dependent on the success and integrity of the financial markets. If a deal looks too good to be true, it probably is."