Google continues to work with investor relations firm Market Street Partners, even after last week’s accusations that one of its employees helped a hedge fund trade on inside information.
The FBI says that before Google announced its Q2 earnings on June 30, 2007, a Market Street employee told an employee at hedge fund Galleon Group that Google was going to announce earnings below market expectations. The FBI says Galleon founder Raj Rajaratnam then shorted Google stock.
A Google (GOOG) spokesperson says Market Street remains a vendor.
This kind of breach of trust could spell doom for Market Street, especially since it is an investor relations firm that works with highly sensitive information.
But it’s important to remember — as Google seems to be remembering — that the FBI’s case against Raj Rajaratnam and Market Street are still just allegations.
It would be hyperbolic to suggest that by continuing its relationship with Market Street for now, Google is endangering its shareholders. In fact, it would almost be surprising for Google to have already cut ties — especially since Market Street itself hadn’t even been contacted by the Feds before last week’s allegations went public.
Still, Market Street has some investigating and plenty of explaining to do. And if the shot-callers at Google feel satisfied with Market Street’s explanation, they must in turn covince Google shareholders that they won’t be duped by a Google contractor again.