AN OPEN LETTER TO NEW YORK ATTORNEY GENERAL ANDREW

CUOMO

August 17, 2009

DEAR MR. CUOMO:

I would like to introduce you to Pete Richichi. Mr. Richichi is the Chief Operating
Officer at Wynit Distribution, one of the country's largest distributors of consumer
electronics. Wynit distributes myriad products. Most notably, Wynit is a major
distributor of GPS location device made by the company Garmin (GRMN). In fact,
Wynit is one of the two largest distributors of these products at present with a wide
range of customers including some of the largest consumer electronics chains as
well as e-commerce companies and independent retailers.

Why should this concern you? Because Mr. Richichi is also a very active
consultant working at the Gerson Lehrman Group (GLG). He's listed as among
their Top 5% of contributors, which means that GLG's hedge fund analyst clients
like him very much indeed. GLG is a so-called "expert network". You likely know
what an expert network is (since your predecessor Elliot Spitzer had started
investigations into several expert networks and the U.S. Senate has demanded
investigations of GLG's role in helping doctors communicate what was alleged to
be inside information to hedge fund analysts). But for the masses I'll explain. An
expert network is an informal group of industry experts who work as ad-hoc paid
consultants. The consultants function as an on-call answer service for large hedge
funds and other Wall Street investors. If an analyst at a multi-billion dollar hedge
fund wants to find out how a particular Garmin SKU is selling or perhaps when a
new Garmin product will be launched, they contact their Gerson Lehrman
Representative who, in turns, calls Mr. Richichi.

Naturally, such consultants are paid very well for their services. I'd wager Mr.
Richichi is clearing $400 to $500 per hour for his services. For those sorts of
prices, the information had better be good. And as someone who formerly spoke
with expert network consultants on a regular basis in a past life, I can assure you
the information is extremely good. So good that it often constitutes information not
yet in the public realm, information that can play a key role in determining whether
to buy or sell a security.

Is this insider information? I would not be able to make such a legal distinction.
But consider the following case. In its latest quarterly report, Garmin announced
unexpectedly strong earnings numbers, causing shares to spike nearly 20% in a
day. A discussion with Mr Richichi could easily have helped to illuminate strong
sales for Garmin than expected, as his company handles millions and millions of
dollars worth of Garmin wholesale sales. Would this type of information have been
interesting to hedge fund managers? Would being able to receive these types of
information have constituted "insider trading"? That's for a lawyer and a judge to
determine.

Consider this, however. If a hedge fund manager had levered up on Garmin shares
in anticipation of good news that the public did not yet have, his fund could likely
have made their annual trading targets in a single afternoon. Retail investors and
others who cannot afford the $100,000 annual subscription fees to access GLG's
network could have made a similar bet but would not have had access to critical
information from key Garmin distributors.

An equally interesting question is whether Mr. Richichi has the permission of his
company CEO and, more importantly, of Garmin, to enter into private discussions
with hedge fund managers on any topic relating to GPS devices. GLG claims that
every single one of its consultants has the approval of their parent company. If this
is true, then documentation of such approvals must be on file somewhere including
signatures from supervisors. Obviously, self-reporting that your boss is OK with
snitching on the secrets of your best customers is probably insufficient proof of
approval, particularly when many of the GLG consultants are being paid 20x
multiples of their standard hourly rates to consult with GLG's hedge fund clients.

Mr Cuomo, it's time to start asking some very hard questions about expert
networks. With the SEC still reluctant to enforce anything against anyone, it has
fallen on your office to provide justice to the small investors, to level the playing
field. As a number of economic studies have shown, information assymetries can
undermine stock markets and result in a critical loss of confidence and trust. Expert
networks are a key mechanism to augment information assymetries, giving even
more information to the hedge fund managers who already control so many of the
cards on Wall Street. Please look closely at GLG, Vista, Coleman, GuidePoint
Global, and LinkedIn (which just entered the expert network business via a
partnership). Ask them the hard questions that should have been asked before this
cancer was allowed to grow on the already mottled face of Wall Street.

Thank you for reading.

Sincerely,

Hedgehog's Repent