Difference between revisions of "Primary Global Research scandal"

Revision as of 05:58, 18 January 2011

Primary Global Research, LLC (PGR) is an award-winning, independent investment research firm that provides buy-side financial institutions with primary market intelligence generated through a global network of industry experts. PGR is an innovator in the delivery of primary information with varied options for clients including carefully matched, direct consultations with experts; data with additive insight and analysis generated by PGR’s in-house analyst staff and interactive access to its entire information universe via a proprietary digital information portal.

Founded as a technology industry specialist in 2003, PGR has grown and maintained its award winning technology coverage and expanded its business coverage to include eight key industry sectors: technology, alternative energy/cleantech, healthcare, financial services, real estate, energy, industrials and commodities, retail and media and Internet. The firm is headquartered in Mountain View, California with satellite offices in New York City, San Francisco, Taipei and the Philippines. Corporate Overview Primary Research

Unlike financial analysis in which a sell-side firm or independent sell-side analyst favorably or unfavorably compares a company's operating and stock valuation to a financial and/or industry peer group based on structured filings with the SEC and informational meetings with senior management at the company and its suppliers and customers, primary or fundamental company or industry research is focused strictly on the development of data that illustrate the competitive advantages of a company, a market and/or a technology.[16]

Expert networks are primarily utilized by hedge funds, long-only investors(mutual funds and pension funds), private equity investors and corporate clients. Expert network research services were originally used by corporations and consulting firms that looked for advice from industry experts to gauge their competitive environment, time product launches, or assess potential pricing and revenue that could be achieved.[17] Research conducted by expert networks involves a transfer of knowledge from an expert to a client. The three components of the network are: 1)the client/investor, 2) the intermediary(expert network), and 3) individual experts.

Until the advent of PGR, expert network-based research firms did not usually provide advice, analysis or recommendations nor did they typically have a direct role in consultations, except for providing assistance in scheduling and interpretation where there is a language barrier.[18] PGR Differentiated Model

PGR was one of the first expert-network research firms to offer clients value-added analytical services in addition to expert consultations. This stemmed from the founders’ collective experience and expertise in the their respective industries and led to the development of customized research reports, group meetings and conferences, and specialized network surveys in addition to access to industry experts.

This specialization has contributed to PGR’s reputation for exact matching of client requests with expert knowledge and information. PGR added to its in-house expertise by adding staff analysts that brought in-depth knowledge as a specialist in a specific industry sector or sectors and whose background facilitated the development of an extended and global network of experts along with the familiarity to connect clients to exactly the right industry expert.

As acknowledged in independent assessments of the company, one of PGR’s key strengths and points of differentiation is its ability to view and understand information as it exists within a complex web of interdependent forces — what PGR refers to as an “ecosystem” — in manufacturing, shipping, product development, geographic demand and supply and production economics.[19]

PGR's analysts are well regarded[20] and frequently contribute insight and commentary in leading business and financial news publications[21][22][23] and broadcasts, including Bloomberg Business News, Bloomberg TV, Reuters, The Wall Street Journal and Barron's among others.[24][25][26]

Going beyond specialized in-house expertise, PGR has been an innovator in how primary data is delivered to clients outside the traditional one-on-one method. The company created and refined a unique digital media portal through which clients and experts initiate and develop research projects as well as access information and insight from experts and analysts working in every industry sector PGR covers.[27] This access includes current and historical primary information on companies, markets, geographies and entire industries and makes it possible for clients to conduct in-depth primary research from their desktop in real time. Trading Desk

Another differentiating element in PGR's business model is the creation of a trading desk operation, PGR Securities LLC, member SIPC and FINRA. The trading operation is a client service for those that prefer to work on the basis of direct trades for services.[28] Clients can trade via the agency-only model, under which PGR does not take a position and that allows investors to trade without competing with their internal trading desk.[29] Industry Sector Coverage

PGR currently provides independent investment research and consulting services in eight key industry sectors. The firms coverage includes: technology, healthcare, retail, alternative energy/cleantech, financial services, media & internet, real estate, and energy & industrials. Each sector led by a Vertical Manager who draws on data channels to stay informed, evaluate data, and share ideas and expertise. Technology

In 2010, PGR was named the Top Pick in technology industry research by Integrity Research, an independent online news and information services about the sell-side research industry.[30] Healthcare

Healtcare sector coverage includes medical devices, biopharmaceutical industry, biotechnology industry, clinical research, healthcare consulting and the managed care industry. Retail

Consumer goods and retail sector covers apparel retailers, retail department stores, retail brands, consumer electronics, personal care, consumer packaged goods, sports and gaming, and the hospitality industry. Alternative Energy & Cleantech

Alternative energy and cleantech sector covers alternative and/or renewable energy sector (wind, solar, biofuels), also energy efficiency (smart grid, utilities, grid infrastructure) and cleantech industries. Financial Services

Financial services sector covers a broad range of financial services industries, from consumer lending and homebuilding to insurance and legal services. Energy, Industrials & Commodities

The energy, Industrials & Commodities sector gathers information from sources ranging from C-level exceutive to manufacturers to provide information on industries including metal & materials, specialty chemical & synthetics, paper, iron & steel, and automotive among others. Media & Internet

PGR Media involves film studios, TV & cable networks, cable & satellite, exhibitors, home video, newspapers & publishing, videogames, out-of-home and media technology. Internet sectors include internet media, ecommerce and chinese Internet. Real Estate

Coverage in PGR’s Real Estate sector includes commercial, mall, office and resort, residential, single and multifamily, industrial and specialty, Real Estate Investment Trusts (REITs), mortgage origination, servicing and collections, securitization and collateralized products, Government-sponsored enterprises (GSE), and Homebuilding and property development. Real-time Information Delivery Push Technology

PGR provides its clients with a push-based research model that delivers written notes and updates i.e., information on new developments and outcomes as they occur, from experts from all sectors and geographies in the PGR network.

The information is collected, verified, organized and issued to clients based on their individual interests via e-mail, the network portal or a phone call from an in-house analyst.

According to a comprehensive independent study conducted on expert networks, PGR's 'push' research model is a unique service among expert networks.[31] The push model allowed clients to gain additional value from PGR's network, even when they were not engaged in direct consultations.[32] Network Portal

PGR offers institutional investors access to a real-time stream of new information and thousands of industry experts through an online network portal.[33] Clients can access the network portal to find new information and industry consultants, view detailed biographical information on PGR's experts, and set up calls or face-to-face meetings with an expert. PGR's "Network Views," written summaries of reports initiated by the firm's in-house analysts, can be viewed on the portal. The portal allows clients to view the biographies of GATE experts and view the individual responses of the experts that are questioned on a "Network View" topic. ExpertPulse

ExpertPulse is the newest of PGR’s digital information portals and provides experts and clients with the ability communicate directly and independently. With ExpertPulse, clients can query individual experts or a community of experts to generate information, thoughts about particular premises and in-the-moment information needs. Conversely, experts and PGR analysts can push specific information to specific clients based on their stated interests.[34]

PGR developed and implemented ExpertPulse in 2009 and continues to improve the technology to improve its responsiveness and relevancy to client interests, uses, and the dissemination of expert and PGR analyst information. Compliance

PGR’s compliance program assures compliance from clients, Experts, PGR Vertical Managers, and PGR’s Trading Desk operations. The standard of quality, accessibility and clear implementation of PGR’s comprehensive compliance program assures and maintains clients’ confidence in the information PGR delivers. To this end, PGR regularly reviews its compliance policy and practice to assure it is in force as intended across its Expert Network base, its broker-dealer and securities trading operations and the organization as a whole. Three-Step Compliance

PGR assures its information’s honesty and applicability with a rigorous compliance program that is manifested in three components: policies, processes and tools.

   * PGR’s policies clearly state the rights and responsibilities of everyone involved in the enterprise, including its clients.
   * PGR’s business processes include training modules and implementation and review of best practices that help ensure that individuals understand and follow policies.
   * PGR’s software tools help individuals understand and comply with these policies and processes. 

These three components form a compliance program that is self-reinforcing, clearly set out and consistently implemented across PGR’s entire Expert network and its organization. Federal Probe of Insider Trading

In late 2010, one of the firm's top sales executives and three of the firm's former 'consultants' were arrested on insider trading charges.[35] Primary Global sales manager James Fleishman was arrested on December 16 for "arranging for clients, including hedge funds, to speak with consultants knowing that consultants would provide confidential information, including inside information, to clients."[36]

The three 'consultants' worked for technology companies and are alleged to have stolen inside information and peddled it to Fleishman. The three are Mark Longoria, a supply manager with AMD; Manosha Karunatilaka, a now-former account manager with Taiwan Semiconductor Manufacturing Co; and Walter Shimoon, 39, senior director of business development at electronics manufacturer Flextronics International.

Wiretaps related to the Galleon Group insider trading case[37] lead federal investigators to Primary Global. A cooperating witness in that case who was arrested in November 2010 is Don Chu, now 'separated' from Primary Global as their Taiwan liaison.[38]