One UK-based expert with GLG said: "You get 15 minutes' ethics training but it's very basic. GLG claims to have more than 850 clients worldwide, served by 300,000 experts in sectors such as healthcare, energy, accounting and finance. While ExpertView, which bills itself as a niche player concentrating on "quality not quantity", says it speaks to all its experts, that is not always true of some of the bigger players who conduct much of their vetting online. They are not authorised unless we've spoken to them." We have telephone conversations with every single expert that we sign to the network. We have spent a lot of time and money getting our compliance right. We have had letters from US companies asking if we have any of their employees on our network and to remove them if we have. However, ExpertView's founder, Martin Tripp, said: "Expert networks are a brilliant bespoke research tool, but you absolutely have to know the questions you can ask. Apart from ExpertView, none of the firms would speak publicly to this newspaper about their industry or the impact the US inquiry is having on their business. However, the Guardian has unearthed eight expert network firms operating within London – with one hired "expert" claiming that he alone has conducted "consultations" with more than 70% of the top investment banks in the City.īig players including GLG, Coleman Research and the Benhamou-linked Guidepoint all operate out of London, as do other firms including AlphaSights, CognoLink, DeMatteo Monness, ExpertView and Informed Edge. The questions these cases raised over the expert network industry have been limited to the US, where many of the firms are based, and there is no suggestion of any wrongdoing in London where the FSA privately plays down such firms' significance. Also that month, Yves Benhamou – a French doctor who was reportedly part of the Guidepoint Global Investors expert network – was charged after allegedly tipping off a hedge fund manager with confidential information about a clinical trial. In November, one Don Chu, a PGR employee, was arrested after evidence gleaned from wiretaps and the co-operation of Richard Choo-Beng Lee, who had already pleaded guilty to insider trading in the Galleon case and is now a key witness. The business practice is perfectly legal, unless inside information is exchanged and used, but increasingly there are suspicions that impropriety is occurring more often than regulators would like. Even the grandaddy of the sector – Gerson Lehrman Group (GLG) – was once dubbed New York's "most valuable company no one outside of Wall Street has ever heard of". Little is known about the world of expert networks. Court papers state that Longoria, who is plea bargaining, was paid $300 an hour to provide information to PGR clients and, from January 2008 to March 2010, received more than $130,000 for his time. The 44-year-old from Round Rock, Texas, made the fateful AMD call while moonlighting as a paid consultant for Primary Global Research (PGR), a so-called "expert network" firm that matches industry experts with money managers looking for informed corporate news. While Gupta's name makes the US inquiry among the highest-profile pursuits of insider traders since the groundbreaking Wall Street investigations of the 1980s, what is really unusual about this crackdown is how the likes of Longoria have become embroiled in the controversy. Insider dealing is as old as markets themselves and the Financial Services Authority, the UK regulator, said there were "abnormal pre-announcement price movements" before 30.6% of 2009 takeover announcements. SILVERLIGHT RESEARCH TRIALGupta, who denies any wrongdoing, is alleged to have passed corporate secrets learned as a board member of Goldman Sachs to Raj Rajaratnam, the founder of the Galleon hedge fund, whose own trial on several counts of fraud and insider trading is due to start on Tuesday. That case is now part of the huge insider-dealing inquiry fixating Wall Street, which became even more sensational last week when the US securities and exchange commission filed civil charges against Rajat Gupta, the former head of the management consulting firm McKinsey. Despite appearances, the unnamed trader's move may have been neither clever nor lucky: in the hours preceding AMD's announcement, the seller had conducted a 10-minute phone call with one Mark Anthony Longoria, who is AMD's supply-chain manager.
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