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The insider trading scandal began with shock and awe. Each week brought a raft of indictments. Well-stationed members of society were exposed as frauds and criminals. With insider trading its most visible focus, the legal violence against the finance industry continues. And like so many TV-addled teenagers, the public may now have lost the ability to respond.
An apathetic public, however, is no a reason to stop. Just because insider trading is no longer shocking doesn’t mean we shouldn’t prosecute it to the full extent of the law. But the failure to shock is also not a reason to search for a response by expanding the definition of insider trading. Read the rest of this entry »
The SEC doesn’t give formal guidance as to what is insider trading and what isn’t, but the fact is they said expert networks are not inherently improper and OCIE director Carlo di Florio and others have given guidance on policies and procedure to use them properly. There’s no specific insider trading statute and there’s not likely to be any time soon, because they’re trying to get at a wide range of conduct.
—Marc Elovitz, partner at Schulte Roth & Zabel: via Reuters
You’re a JD candidate. You expect it will provide for a predictable and lucrative career despite the massive price tag. However, law school hardly looks like the ticket it once was. With law firms shrinking around the country, clients insisting on flat rates, and a new wave of highly sophisticated outsourcers, both domestic and international, not only are there fewer jobs, those that do emerge are less stable and less remunerative. Whoops!
Then the news cycle begins. Expert networks, once an obscure service to a niche industry, find themselves in the middle of a string of insider trading investigations. Read the rest of this entry »
Expert networks are everywhere. The “idea” site, PSFK, appears to have launched its very own, which they named purple list. The name appears to derive from the color-scheme on PSFK while providing a new spin on expert networks – a go-to source for new
ideas and inspiration.
Purple List has a similar look and feel to Quora, G+, or Focus, and it’s organized along the lines of Intota’s directory model. The about section suggests that they will charge the respective expert for listings, and those needing new ideas and inspiration can peruse profiles for free.
Sadly, a paid listings model will probably limit the opportunity of this marketplace. It’s just hard to say what an expert would get for their $20 profile.
We, as investors, do not feel we are at the point yet where it is necessary to ban managers from using experts. Furthermore, we will still invest in managers that do utilise the services of experts. However, it is essential for us to hold managers to a higher standard and demand that they implement specific practices.
Strip away all the fancy experts, managers, and front-line service-professionals from an expert network, and you see, at the bedrock of the business, payment and contract management.
Why would you outsource that? Why would you give up square one of the organization?
True. Payment platforms are commodities. Click-through contracts are procedural, annoying, and available. It’s tempting to let someone else take care of it. After all, a good cook doesn’t necessarily have a farm. In fact, they rely on others to produce the highest-quality ingredients for their recipes.
But it’s a bad idea.
Gerson Lehrman Group isn’t outsourcing individual ingredients. They’re outsourcing the recipe.
[NB: I’m surprised Integrity Research didn’t cover this.]
The Economist drafted a typically cheeky and wonderfully entertaining gloss on the current state of expert networks. For the most part, they get it right, but they also get it wrong in important ways.
No, Wini Jiau is not a player in the expert network industry. She was a consultant whose information was the envy and downfall of the investment community and is alleged to have persistently acquired and sold material non-public information to a loose band of investors. The Economist would have done better to mention Don Chu, who did work at Primary Global and did confess to trading in inside information. Wini was just a consultant.
Yes, because of what may eventually be described as a systematic conspiracy by Primary Global to trade in inside information through a vast network of corrupt insiders, both alleged and confessed, eyebrows have been raised. Regulators, investors, and limited partners have awakened to the risks inherent in any research activity.
No, these risks are not particular to expert networks. Indeed, an example elaborated by the Economist actually suggests the opposite – that expert networks might serve as a kind of prophylactic to the kinds of funny-business to and for which we have recently seen many confessed and convicted.
The Economist suggests that compliance protocols and procedures are no match for those determined to do wrong. The piece conjures a cautionary tale of an investor, having been introduced to an expert through a network, rerouting their activities through an independent consulting relationship, “which enables them to buy tips without GLG ever knowing.”
It’s certainly possible, but isn’t it also an argument for expert networks. If expert networks are so darn difficult about compliance that an adroit and corrupt investor would choose to circumvent them, then shouldn’t “compliance chiefs” relish the chilling effect expert networks have on their employees’ baser instincts?
I did enjoy, however, their clever turn of phrase to a conclusion. Indeed, Rajat could have used some expertise in discretion. Though perhaps he could have learned it through the policies, procedures and systems of an expert network.
Some 80% of those ensnared in the insider-trading investigation that shook up the street in the fall of 2010 have either plead guilty or been convicted of crimes related to insider trading. Among those pending, Wini Jiau. According to her court-designated lawyer, former federal prosecutor Joanna Hendon, Wini can’t wait to go “home to California and her beloved dog, Hunter.”
For Judge Jed Rakoff, who will preside over the case, however, the process is just getting started: “I am so impressed with the level of lawyering in this case on both sides. “I saw somewhere in press reports that the parties were talking settlement, and I personally hope that is not true because I am really looking forward to this trial.”