Guest Post: Shining A Light On Expert Networks Part 2

Submitted by Hedgehog's Repent

An Open Letter to Andrew Cuomo, Part II:

Dear Mr Cuomo (or should I call you Andrew by now?):

In my last missive, in (re)introduced you to the potential for illegal and unethical harvesting of inside information as created by so-called "expert networks." I singled out the Gerson Lehrman Group in my last missive. Today, I'll keep my laser-like focus on GLG and a little phone company called Verizon (Ivan Seidman, please pick up the phone now.). Verizon is one of the two largest phone companies in the country right.

As such, people working inside Verizon are privy to untold quantities of potentially material information not only about their own company but about any number of other companies including but not limited to: handset companies, communications tower operators, communications equipment manufacturers, fiber-optic cable makers, engineering contractors, colocation facilities companies, and OSS/BSS software companies. So one would think that senior level (or any level, for that matter) of employees at Verizon would be forbidden to speak to hedge fund managers without a handler of some sort on the line (IR, PR, whatever).

Yet our old friend GLG broadly advertises a senior Verizon manager as a key thoughtleader in the GLG network. Andrew Malis is the Director of Packet Network Engineering at Verizon Communications (I linked to his LinkedIn profile -- these days, LinkedIn looks a lot like GLG thanks to deals like this. Reid, got your lawers ready to go?). Malis also heads a key telecom industry standards determination board, as President and Chairman of the Board at IP/MPLS Forum. Now, Mr. Malis may indeed only be providing 5,000 foot commentary on the telecom landscape.

But isn't it remotely possible that his insights might be colored by the fact that he is privy to secret information inside a telecom behemoth that can single-handedly swing the fortunes (and share prices) of dozens of other publicly traded companies? Or what if Mr. Malis mistakenly reveals to a GLG caller that, indeed, Verizon does have a deal planned with Apple to launch a new iPhone? What value would this be to a hedge fund manager, even if the revelation was the result of a slip? Could such tantalizing prospects in fact be the primary reason that hedge fund managers have made Mr. Malis a Top 5% selection in the GLG network?

These are idle allegations, of course. Not that any of this could ever be true. Of course, it would be very easy to disprove such allegations. Should GLG or Mr. Malis be able to produce a transcript of conversations he had conducted with hedge fund managers, that would do the trick nicely. And considering the nature of the business that GLG conducts -- essentially, facilitating investment advice -- one would think that such transcripts, or at least recordings, do exist. Right? So a simple habeas corpus for such transcripts should be no problem at all.

What do you think, Andrew? Might it be worth asking to take a look at those transcripts? Or asking if they do in fact exist?


Hedgehog's Repent