Wall Street Firms, Hedge Funds, Recruit CIA, Ex-Military Intelligence

February 18th, 2010
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Contributed by: Michael Bagley, Energy Hedge Fund Syndicate
Wall Street firms and hedge funds are actively recruiting former CIA and military intelligence officers in a bid to boost their security and risk management practices by looking for expertise outside the corporate world.

Financial firms are particularly eager to recruit former Afghan and Iraq war vets with intelligence operations experience since they can bring new technology and techniques to research and analysis, according to Michael Bagley, founder and president of Washington D.C.-based financial intelligence firm, The OSINT Group.

Washington publication Politico recently reported that the CIA is offering their members a chance to offer their expertise to private companies. "In one case, these active-duty officers moonlighted at a hedge-fund consulting firm that wanted to tap their expertise in "deception detection," the highly specialized art of telling when executives may be lying based on clues in a conversation," the publication stated.

The OSINT Group itself includes operatives formerly connected to a classified military intelligence program known as "Operation Able Danger," which used open source intelligence methods, data mining techniques and link analysis that ultimately identified several of the 9/11 hijackers prior to the attacks in New York and Washington, Bagley said.

Today, the private sector needs timely, relevant and actionable "intelligence" to secure their businesses against potential threats, he explains. Some of this intelligence can be produced with open source information " publicly available information that anyone can lawfully obtain.

The OSINT Group, which counts among its clients a private equity firm based in Beijing, as well as a U.S. hedge fund, specializes in providing firms with analysis of what it calls "gray" literature, which consists of written information produced by the private sector, government sources and academia that is available only on a limited basis, either because few copies are produced, the existence of the material is largely unknown, or access to information is not readily available on the web.

To analyze this wealth of largely untapped research, The OSINT Group uses an advanced analytical toolkit for pattern discovery, link analysis, data visualization and network-centric analysis. It presents data using graphical displays to show underlying relationships and patterns, and can deliver it to clients in different formats, including email alerts.

Services provided Visual Analytics, the third-party vendor The OSINT Group works with, include placement algorithms to visually show networks of related data, weighted groups of relationships, value occurrence frequency, patterns of activity and event sequences, as well as data capture and transmission tools enabling real-time, online collaboration.

Beyond the technology it uses, The OSINT Group's key value lies in its personnel's ability to access intelligence that financial firms normally do not know how to find, analyze it and deliver it in a range of different formats.

"We use technology used by the U.S. intelligence community. Our approach, how we use the data, how we connect it, is different (from other research firms), Bagely said in an interview with Wall Street & Technology. "We specialize in accessing government data or academic data."

Particularly hot at the moment is research pertaining to upcoming financial reform legislature, he adds.

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