After questioning an employee with ties to the maligned hedge fund company Millenium Partners LP, New York state investigators may be close to arresting him, sources told Reuters Friday.

An employee at DC Capital LLC, based in Syosset, N.Y., was questioned about his dealings with Steve Markovitz, the former Millenium trader who a month ago pleaded guilty to a felony charge stemming from late trading and is now cooperating with authorities.

Tariq Zahir, the DC Capital employee in question, was not available for comment. Also not commenting was the office of New York Attorney General Eliot Spitzer, whose probe into the mutual fund industry has increased in both breadth and depth over the past few weeks.

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