Last year, publicly traded US companies held an average of 99 one-on-one meetings with investors. These closed-door meetings are intended to help executives persuade investors that the company’s stock is a worthwhile investment. But some companies avoid the practice as this access can become an unfair advantage for traders. Regulators are paying extra close attention to this practice and are keen to crack down on companies that leak information to investors.
Access usually is controlled by brokers and analysts at Wall Street securities firms, who lean on their relationships with companies to secure meetings with top executives. Invitations are doled out to money managers, hedge funds and other investors who steer trading business to the securities firms, which in turn provide the investors with a service called “corporate access.” Investors pay $1.4 billion a year for face time with executives, consulting firm Greenwich Associates estimates based on its surveys of money managers. The figure represents commissions allocated by investors for corporate access when they steer trades to securities firms.