Hedge Funds Making Profits Using FOIA Requests, Says New Study

Knowledge is power, but it can also be profitable. According to a recent study by academics at the Robert H. Smith School of Business at the University of Maryland, Hedge Funds are using Freedom of Information Act (FOIA) requests to get access to information that frequently leads to trading profits.

Most people associate the Freedom of Information Act (FOIA) with investigative reporters looking for a story, not Wall Street hedge funds. However, it turns out that FOIA requests regarding government interactions wiith drug companies are another method for professional investors to get an edge according to a new study by Univ. of Maryland academics Alberto G. Rossi and Russ Wermers, as well as coauthor Antonio Gargano from the University of Melbourne.

Members of the public (including the investment community) can request many kinds of information that the government doesn’t routinely make public using FOIA. The information received falls into a gray area in terms of financial markets as it’s generally considered public but not broadly disseminated. Continue>>>