Placement Agents Scrutiny

Placement Agents Scrutiny

Placement Agents Struggling under Regulatory Scrutiny

The placement agent industry has struggled after damaging scandals including insider trading and pay-to-play schemes.  As placement agents receive more regulatory scrutiny, they also face the problem of sinking revenue.  There are fewer clients for placement agents in the wake of the financial crisis and the "expert networking" industry is struggling to survive.
Those sources said securities regulators are once again taking a look at the expert networking business, in part because the Galleon case revealed the lengths that traders can go to crack corporate secrets.
The so-called expert networking industry was first thrown for a loop in 2007 when U.S. securities regulators began looking into allegations that some hired-gun consultants had improperly divulged confidential corporate information to traders looking to score a quick profit.

But lingering regulatory concerns about the potential for abuse in the rent-an-expert business never went away, according to legal sources.

Still, the chronic suspicion is enough to make some hedge funds steer clear of the industry, even though managers know that may put them at a competitive disadvantage. Source

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