StockGate: Gradient Reportedly Admits To Producing Biovail Research Without SEC-Required Compensation Disclosures.

Publication: The America's Intelligence Wire

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COPYRIGHT 2006 Financial Times Ltd.

(From FinancialWire)

Byline: Dan Abrams, Pete Williams

FinancialWire-27 March 2006-StockGate: Gradient Reportedly Admits To Producing Biovail Research Without SEC-Required Compensation Disclosures (C)2006 Investrend Communications, Inc.

March 27, 2006 (FinancialWire) Gradient Analystics, the subject of an expose on Viacom s (NYSE: VIA) CBS network s 60 Minutes Sunday night, for alleged biased research produced on Biovail (NYSE: BVF), has now admitted that giant hedge fund SAC Capital Management paid it for its research, and there were no required U.S. Securities and Exchange Commission disclosures, according to Charles Gasparino, reporting on CNBC, a unit of Geneeral Electric (NYSE: GE).

At the same time, a $4 billion class action lawsuit has been filed on behalf of Biovail shareholders against SAC, its founder Steven A. Cohen, Gradient and Banc of America Securities (NYSE: BAC) and one of its analysts, David Maris.

It has also been disclosed that the SEC has subpoenaed Gradient for its own copies of communications it may have had with journalists whose own subpoenaes are on hold pending new SEC guidelines. These journalists include Herb Greenberg, now with Dow Jones (NYSE: DJ) Marketwatch, but formerly with TheStreet.com (NASDAQ: TSCM), whose own co-founder and CNBC personality James Cramer was subpoenaed, as well as Carol Remond, a writer for Dow Jones.

Despite these developments, Greenberg appeared this afternoon on CNBC to defend the independence of Gradient s reports, saying its research is distributed to subscribing mutual funds and others, and not to the public. He called the new developments spin. Greenberg did not address allegations that a reporter working for Greenberg and Cramer actually ghost-wrote reports for Gradient, or whether his own subsequent news reporting on Gradient s research wittingly or unwittingly effectively moved the findings of Gradient on Biovail and Overstock.com (NASDAQ: OSTK) and several others into the public arena.

Michael Mayhew, CEO of Integrity Research Associates,...

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