Investment Espionage or Savvy Analysis?

Large investors are increasingly using third party research and expert matching services to improve their chances of success. Here is how it works. An institution has a question which cannot be answered or will not be answered by management. The third party researcher will covertly attempt to gather important intelligence that lets the portfolio manager connect a few more dots. So far nothing wrong just a large investor using clout that a small investor cannot even dream of. The eithical and moral dilemna occurs when the research service does surveys or investigations that are not identified as investment research. Internal staff may be caught unawares by seemingly simple questions that seem trivial. But when enough intel is gathered a clear picture emerges. The CIA and other intelligence services have been doing this for decades. Should well funded institutions be allowed to do the same? Should regulations or codes of conduct be put into place? What if the publicly traded company just does not want this type of information to leave the corporate mothership? What recourse do they have? How do you assess damages. The Aug 1, 2005 edition of Business Week touches on the topic in their article "Have Experts Will Hire Out" .
National Investor Relations Institute (NIRI) President Lewis M. Thompson is quoted as being concerned about the legal and eithical issues. The end run circumventing Reg FD and other securities legislation tilts the playing field in favour of the unscrupulous. Greed such as it is will one day (usually sooner that later) will twist this technique into an illegal advantage. Why not set standards now? Regulate the large institutional investor's behaviour. They have the budget to hire the covert researchers. As they say follow the money?