Globe and Mail – Gradient Analytics Inc. has built a lucrative business offering independent research to investors, but its reputation is now being hammered by lawsuits that allege it is little more than a rewrite shop for hedge funds.
Gradient, based in Scottsdale, Ariz., is named as one of the key defendants in a $4.6-billion (U.S.) lawsuit by Mississauga-based Biovail Corp. that alleges the research firm participated in a wide-ranging and illegal conspiracy to manipulate the stock market on behalf of a prominent hedge fund, SAC Capital Management LLC.
The allegations have not been proven.
For Gradient, the Biovail suit is case of déjàvu.
Last summer, embattled Internet discounter Overstock.com sued Gradient and a separate hedge fund, making essentially the same allegations that Biovail has  that the supposedly independent research firm allowed a hedge fund to ghost-write inaccurate and negative reports on a target company and timed the release of the report to benefit the fund’s trading strategy.
