By Emily Chasan
NEW YORK, Jan 19 (Reuters) - Gerson Lehrman Group wants to hire a lobbying firm in Washington, D.C., as the expert network firm braces for political fallout from an insider trading investigation, said people familiar with the situation.
The role of expert network network firms, which match hedge funds seeking information with industry consultants, is a key focus of the investigation by federal prosecutors into the misuse of corporate secrets.
Since late November, federal prosecutors have charged eight people associated with expert network firm Primary Global Research with helping to provide confidential corporate information to hedge fund traders and analysts.
To date, no one affiliated with Gerson Lehrman, the largest expert network firm, has been charged with wrongdoing. But given Gerson Lehrman's size and prominence in the business, the New York firm wants a stronger voice in Washington in the event political leaders take a fresh look at the industry, said people familiar with the situation.
In recent weeks, Gerson Lehrman has met with at least one lobbying group with strong ties to Democratic politicians on Capitol Hill, said sources, who asked not to be named because they were not authorized to disclose the information to the media.
Gerson Lehrman, which has a roster of some 250,000 expert consultants, declined to comment. It was not clear whether other firms like Guidepoint Global and Coleman Research were also seeking Washington representation.
Gerson Lehrman's desire to hire a lobbyist could be a sign that it expects Congress to raise questions about the expert networking industry, sources said.
It would not be the first time that the business of matching hedge funds with moonlighting corporate executives has drawn scrutiny from Capitol Hill.
About five years ago, Congress asked the U.S. Securities and Exchange Commission to investigate whether doctors working as consultants for expert network firms were leaking information about experimental drug trials to hedge funds. The New York Attorney General's office also conducted a probe into the industry around that time. Neither of those inquiries resulted in formal charges.
Use of expert networks has slowed among hedge funds in the past few months amid the government's newest probe, and some hedge fund managers have said that the rules over what type of research is legitimate must be clarified.
In a separate expert network investigation, federal prosecutors charged a French doctor last year with providing tips about drug trials to a portfolio manager with hedge fund FrontPoint Partners. The doctor, Yves Benhamou, was working as consultant for GuidePoint Global at the time prosecutors said the confidential information was passed along.
(Reporting by Emily Chasan and Matthew Goldstein. Editing by Robert MacMillan) Keywords: EXPERTNETWORKS/ (emily.chasan@thomsonreuters.com; +1 646 223 6114; Reuters Messaging: emily.chasan.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2011. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
NEW YORK, Jan 19 (Reuters) - Gerson Lehrman Group wants to hire a lobbying firm in Washington, D.C., as the expert network firm braces for political fallout from an insider trading investigation, said people familiar with the situation.
The role of expert network network firms, which match hedge funds seeking information with industry consultants, is a key focus of the investigation by federal prosecutors into the misuse of corporate secrets.
Since late November, federal prosecutors have charged eight people associated with expert network firm Primary Global Research with helping to provide confidential corporate information to hedge fund traders and analysts.
To date, no one affiliated with Gerson Lehrman, the largest expert network firm, has been charged with wrongdoing. But given Gerson Lehrman's size and prominence in the business, the New York firm wants a stronger voice in Washington in the event political leaders take a fresh look at the industry, said people familiar with the situation.
In recent weeks, Gerson Lehrman has met with at least one lobbying group with strong ties to Democratic politicians on Capitol Hill, said sources, who asked not to be named because they were not authorized to disclose the information to the media.
Gerson Lehrman, which has a roster of some 250,000 expert consultants, declined to comment. It was not clear whether other firms like Guidepoint Global and Coleman Research were also seeking Washington representation.
Gerson Lehrman's desire to hire a lobbyist could be a sign that it expects Congress to raise questions about the expert networking industry, sources said.
It would not be the first time that the business of matching hedge funds with moonlighting corporate executives has drawn scrutiny from Capitol Hill.
About five years ago, Congress asked the U.S. Securities and Exchange Commission to investigate whether doctors working as consultants for expert network firms were leaking information about experimental drug trials to hedge funds. The New York Attorney General's office also conducted a probe into the industry around that time. Neither of those inquiries resulted in formal charges.
Use of expert networks has slowed among hedge funds in the past few months amid the government's newest probe, and some hedge fund managers have said that the rules over what type of research is legitimate must be clarified.
In a separate expert network investigation, federal prosecutors charged a French doctor last year with providing tips about drug trials to a portfolio manager with hedge fund FrontPoint Partners. The doctor, Yves Benhamou, was working as consultant for GuidePoint Global at the time prosecutors said the confidential information was passed along.
(Reporting by Emily Chasan and Matthew Goldstein. Editing by Robert MacMillan) Keywords: EXPERTNETWORKS/ (emily.chasan@thomsonreuters.com; +1 646 223 6114; Reuters Messaging: emily.chasan.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2011. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.