Insider trading case sends chill through PR

By Yinka Adegoke - Analysis

NEW YORK (Reuters) - Wall Street's top public relations firms have long supplied grist to a mill hungry for tips about financial deals, but revelations in an insider trading case could lead to that stream of information slowing down.

U.S. authorities have accused former Lehman Brothers salesman Matthew Devlin of tipping friends and relatives about 13 impending mergers with confidential information he got from his wife Nina, a partner at Brunswick Group, an international financial communications firm.

While Nina Devlin is not charged in the case, and Brunswick has said the information was obtained without her knowledge, the breach of client trust is immense, PR experts said.

Brunswick said on Monday it has suspended Devlin pending the outcome of an internal review by outside counsel, saying it was an "appropriate course of action in this situation".

Experts said the case shows the danger of "pillow talk" between PR professionals and their spouses, or gossip with friends.

The Devlin case involved some of the biggest deals in the last four years including Alcoa Inc's $27 billion hostile offer for Alcan in 2007 and Dow Chemical's $15 billion acquisition of Rohm & Haas this year.

There will likely be a crackdown at PR firms with such sensitive news, not only on who has access to information but where and when they have access.

Most firms Reuters spoke with said they are taking a second look at their policies for handling information considering tighter restrictions on taking documents home and access to computer systems. Most had already sent out policy reminders to their staffers and are consulting their lawyers.