At the time of the SAC analyst’s arrest last November on charges that he paid the doctor, The New York Times reported that “the transfer of information was made possible by Gerson Lehrman, which had played matchmaker. If this expert network did not exist, it is not clear that Mr. Martoma and Dr. Gilman would ever have found each other.”
Gerson Lehrman’s website says it provides “access to primary research for a wide range of companies: financial and investment institutions, life science companies, the Fortune 1000 and entrepreneurs around the globe.” That seems innocent enough. And to underscore the firm’s commitment to what it calls “best practices,” the website features a section on “Standards” that outlines a set of rules designed to make sure the paid members of its expert network, called “Council Members,” do not provide information on “subject matter that a Council Member cannot discuss.”
Still, the same Times article opined that “the expert network business model is inherently perilous,” citing the case of another expert network that closed its doors after being caught up in a different insider trading case.
So, I’m wondering whether amid the publicity swirling around the SAC allegations, Gerson Lerhman and its competitors have done anything to change how they operate, and whether business is down because their hedge fund clients have gotten spooked.