LONDON — A hedge fund based in London set up a “dirty-tricks unit” to manipulate share prices and get illicit information on companies in an attempt to make millions on the stock market, an insider has revealed.

Private detectives were allegedly employed to hack into executives’ e-mails and telephone records. Front companies were set up to allow the hedge fund traders to pose as independent researchers or journalists.

Negative information on companies was then distributed to leading investment banks in the hope that rumors would spread and some share prices would fall. The hedge fund, which cannot be named for legal reasons, stood to make millions from “short-selling”” the shares as they fell in value.

The allegations — made in a sworn statement seen by the Daily Telegraph and which has been sent to financial regulators — will add to growing concern over the activities of rogue traders in London.

The Financial Services Authority, London’s regulator, has begun a criminal investigation to find the trader who allegedly made 100 million pounds from the 17% slump in HBoS shares yesterday. The shares fell after “malicious” rumors were spread in London about the bank, sparking fears that the price had been illegally manipulated — a move described as “the modern day version of bank robbery.” FSA investigators are seeking e-mails sent to traders that are thought to have prompted widespread selling of HBoS shares. They claimed the bank was experiencing difficulties.

It emerged yesterday that the rumors are thought to have originated in the Far East, with Singapore named as the most likely source.

In a separate development, Credit Suisse, the investment bank, admitted that it had uncovered a separate 1.4 billion pounds share-dealing scam by rogue traders — many of whom were based in London — who were trying to protect their bonuses.