The FBI is now questioning Menucher Menucherhry, a consultant for dominant expert-network firm Gerson Lehrman, as part of its industry-upending insider trading investigation, The Wall Street Journal reports.
According to people familiar with the matter, “The consultant, an employee of Marvell Technology Group Ltd., provided information about the technology industry to a Gerson client, Diamondback Capital Management LLC, a hedge fund the FBI raided last week, the people said.”
The Journal also said that “It isn’t known whether authorities suspect Mr. Menuchehry passed inside information to any fund.”
Diamondback has put a portfolio manager on leave and said the employee, and not the whole firm, is being targeted in the probe.
The questioning of the Gerson consultant would mark the second major swipe the feds have taken at an expert-network firm. Primary Global expert networker Don Chu was arrested last week and has been charged with providing insider information to a trader.
The SEC and the New York Attorney General’s office have investigated Gerson Lehrman before, but didn’t file charges.
Gerson Lehrman, or GLG, is about as insider-y a consulting firm as can be imagined. It boasts a network of more than 250,000 “business experts,” many of whom are currently employed in high-level positions at companies in sectors ranging from real-estate to technology. Just to take one example of the kind of person GLG can hook clients up with, the company counts among its “Leading Experts on Health Care” John Beckerman, former global brand manager of Astrazeneca, a publicly traded biopharmaceutical firm with a market capitalization of $46.62 billion.
The expansion of authorities’ questioning to include GLG indicates the insider-trading investigation is quite broad. The continual flow of new big-name Wall Street firms into daily headlines has provided for much excitement in the press, but whether it’s possible to successfully prosecute any allegations remains an open question, according to a recent interview with former AG Eliot Spitzer.
Correction (10:30 a.m.): An earlier version of this story said Menucher Menucherhry is an employee of Gerson Lehrman and attributed that characterization to The Journal. He’s technically an employee of Marvell Technologies and not GLG, for whom he has consulted.
mtaylor [at] observer.com | @mbrookstaylor