Thursday, 26 May 2016
Last updated 19 hours ago
Dec 1 2010 | 11:08am ET
Massachusetts authorities have leaped into a wide-ranging insider-trading investigation, demanding information about research firm Guidepoint Global's relationship with a Massachusetts hedge fund.
William Galvin, Massachusetts Secretary of the Commonwealth and a frequent hedge fund bête noir, is not one to be left out of a major hedge fund scandal. So he's issued a subpoena to Guidepoint, which provides expert network services similar to those offered by Primary Global Research and Broadbend Research, two firms that been questioned in the growing case.
"The recent pronouncement about the role of expert consultants and hedge funds is extremely troubling," Galvin said. "It is the responsibility of my office as sole regulator of small state-registered hedge funds to fully explore and investigate the role these firms play with these state-registered entities."
The hedge fund was not identified. Galvin said it had less than $20 million in assets under management, and its relationship with New York-based Guidepoint emerged during a routine examination in May.
Interest in Guidepoint was apparently sparked by the firm's link in news reports to Yves Benhamou, the French doctor arrested in Boston last month and charged with passing insider tips to hedge fund FrontPoint Partners.
Galvin is not the only one taking a closer look at expert networks; the networks are doing so themselves. Gerson Lehrman Group, the largest such network, cut ties with one expert who was questioned by the Federal Bureau of Investigation over the summer.
Menucher Menuchehry spoke with hedge fund Diamondback Capital Management three times in 2008 through Gerson Lehrman, MarketWatch reports. Diamondback was one of three hedge funds raided by the FBI last week, although the firm said that the government has assured it that it is not a target of the investigation.
Menuchehry, who works at Marvell Technology Group, last consulted for Gerson Lehrman in May and left its expert network in October. He has also served as a consultant for Primary Research and other expert networks.