Sources tell Reuters that securities regulators might start investigating the expert networking business.These professional networkers make a living by connecting investors with industry experts who could potentially have and divulge inside information to them.
The trouble with experts who get paid to advise traders is they may be tempted “to cross the line to provide inappropriate information,” Robert Romero, the hedge fund manager of Connective Capital, a $65 million tech-focused hedge fund, told Reuters.
This is bad news for the consulting expert business, whose clients might not want to get mixed up in investigations.
Another reason they might want to network on their own:
One networking business, Gerson Lehrman, says it uses technology to keep track of the meetings it arranges between its experts and clients.
Who wants to pay a company that will give its name out to federal investigators?
Revenue for the industry (usually yearly retainers start around $60,000, and premium networking services can cost more than $1 million a year) has already declined a lot recently: about 16 per cent to $360 million in 2009, according to Integrity Research Associates.