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The New Insider Trading: China Connections

Even while the federal government is apparently cracking down on expert networks and other types of independent research firms that offer customers an inside track on various economic sectors, sell-side research firms are pushing ahead with these same types of promises. The twist, however, is that they aren't promising the inside track on companies traded on US equities markets.

Instead, they are touting their access to important decision-makers and data holders in China.

Several firms offer junkets for customers to places like Macau, where customers are told they will be introduced to people with access to markets and information unavailable to the typical US based investor.

Typically, the firms involved aren't the big, bulge bracket Wall Street firms. But the practice of making these kind of introductions and offering access to non-public information about China is increasingly wide-spread in the second and third tier firms, according to a person familiar with the matter.

With investors and traders constantly seeking an informational "edge" over competitors, this is apparently becoming a part of the ordinary business of some sell-side firms.

Wall Street