Under Scrutiny: Expert Networks

The federal government's recent raids of high-profile hedge funds, part of an insider-trading investigation, have focused attention on firms known as expert networks. The firms act as matchmakers, connecting investors with people who have extensive knowledge of countries, industries, and companies and who can provide information on product development, sales, and strategy. Two hedge funds, Level Global Investors and Diamondback Capital Management, were searched by FBI agents on Nov 22, 2010. A third hedge fund, Loch Capital Management, was also searched by FBI agents. On Nov 24, 2010, a consultant to hedge funds, Don Ching Trang Chu, was charged with arranging for insiders at publicly traded companies to provide information improperly to clients of his firm.