SEC Clears Gradient Of Hedge Fund Conspiracy

Feb 14 2007 | 12:01pm ET

Gradient Analytics, the independent research firm accused of conspiring with hedge funds to drive down stock prices, said today that the Securities and Exchange Commission has ended its probe into the firm.

Scottsdale, Ariz.-based Gradient was informed by letter from the SEC’s San Francisco office that the probe has ended and that the office recommended no enforcement action be taken.

“We are not surprised by the SEC decision,” CEO Brad Forst said. “Independent and objective research may be unpopular with some companies, but it is vital information in the equities market.”

The SEC opened its investigation after online retailer Overstock.com sued Gradient and hedge fund Rocker Partners, accusing them of trying to manipulate its stock price. Later, Canadian pharmaceutical company Biovail filed a similar suit against Gradient and another hedge fund.

Forst said he is confident Gradient will prevail in those cases, arguing that independent research is protected speech under the First Amendment.

“Our work represents both the right of free speech and the right of shareholders and investors to understand the questionable business practices of public companies,” he said.

Forst succeeded firm founder Carr Bettis as president and CEO in December. At the time, the firm denied that the move had anything to do with the SEC probe or lawsuits. Bettis remains chairman of Gradient.


In Depth

PAAMCO: Will Inflation Deflate the Asset Bubble?

Jan 30 2018 | 9:49pm ET

As the U.S. shifts from monetary stimulus to fiscal stimulus, market pricing should...

Lifestyle

CFA Institute To Add Computer Science To Exam Curriculum

May 24 2017 | 9:25pm ET

Starting in 2019, financial industry executives sitting for the coveted Chartered...

Guest Contributor

Boost Hedge Fund Marketing ROI By Raising Your ROO

Feb 14 2018 | 9:57pm ET

Tasked with delivering returns on client capital, a common dilemma for many alternative...

 

FINalternatives Trending

From the current issue of