New Compliance Head for GLG

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Gerson Lehrman Group, the leading expert-networking firm, recently hired a former Securities and Exchange Commission enforcement lawyer to lead its compliance effort. Michael King, a former Enforcement Division lawyer based in the SEC’s Fort Worth, Texas office, was named GLG’s chief compliance counsel, reporting to general counsel Laurence Herman.

Last time we checked, GLG employed 22 people in its legal and compliance departments.  Many of the compliance professionals are based in GLG’s large Austin Texas office.

GLG has not has not been accused of any wrongdoing in the insider-trading investigations. GLG was identified as the firm that connected former SAC Capital Advisors portfolio Mathew Martoma with the doctor who allegedly passed him tips about Alzheimer’s drug trials.

The SEC’s complaint against Martoma, CR Intrinsic Investors LLC, an affiliate of SAC, and Dr. Sidney Gilman, explicitly references the compliance safeguards that GLG has in place.  According to the complaint, Gilman received training from GLG on the prohibitions of Federal securities law, and was repeatedly reminded not to share non-public information with clients.  Further, GLG sent emails to Gilman explicitly listing bapineuzumab, the drug in a Phase II trial, as a topic that Gilman was “not allowed to discuss.”

According to the complaint, Martoma and Gilman scheduled their consultations through GLG to coincide with meetings of the clinical trial’s Safety Monitoring Committee (SMC).  Martoma allegedly misled GLG on the topics being discussed.  Between 2006 and 2009, Martoma apparently had 42 consultations with Gilman arranged by GLG.  Gilman was paid $108,000 by GLG during this period for his consultations with CR Intrinsic, including an additional 17 consultations with others in the organization.

Gilman has pleaded guilty and is cooperating with authorities.  Martoma has pleaded not guilty.  CR Intrinsic agreed to pay a settlement of $616 million while neither admitting nor denying the charges against it and the settlement has been tentatively accepted by the federal judge overseeing the case.

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