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Marketplace Scratch Pad

The CIA on Wall Street

Scott Jagow Feb 2, 2010

Politico has a story revealing that CIA agents are allowed to moonlight in the private sector, if they get prior approval. Where do you suppose a CIA agent trained in lie detection might be in demand?

Politico’s story is an excerpt from a new book by Eamon Javers: Broker, Trader, Lawyer, Spy: The Secret World of Corporate Espionage.

Javers points to a firm called Business Intelligence Advisors, based in Boston. The initials BIA are no coincidence:

BIA was founded and is staffed by a number of retired CIA officers, and it specializes in the arcane field of “deception detection.” BIA’s clients have included Goldman Sachs and the enormous hedge fund SAC Capital Advisors, according to spokesmen for both firms.

BIA has employed active-duty CIA officers in the past, although BIA president Cheryl Cook said that has “not been the case with BIA for some time.”

“Deception detection” is another way to say “human polygraph machine.” BIA employees are highly skilled at determining whether someone is telling the truth — based on their voice, the phrases they use, their body language, etc. Get this:

Often, BIA deploys its CIA-trained operatives to analyze quarterly corporate-earnings calls. Those conference calls are an important Wall Street ritual that serves as a direct line from the corporate boardroom to the trading floor.

Companies use the calls to put the best spin on the events of the quarter and give investors a sense of the way ahead. Analysts for top-of-the-line investment houses use them to ask probing questions of senior management.

And BIA uses them to figure out if the company may not be disclosing the truth — all with the help of the CIA-trained analysts.

Politico gives an example, which you can read here. Bottom line — everybody on Wall Street is looking for an edge, and knowing whether someone is lying or not could mean the difference between making or losing millions.

But on the government side, the story has drawn strong reactions to the moonlighting issue, cited in Politico’s follow-up today. Senate Intelligence Committee Chairwoman Dianne Feinstein says she wants answers. CIA spokesman George Little said moonlighting has been allowed for decades on a case-by-case basis:

…the CIA’s mission “always — always — comes first when such requests are examined for approval or denial. It’s wrong to think these individuals simply transferred current operational tradecraft to a for-profit venture. No.”

“The fact that people have the energy and creativity to run a business outside of work hours shouldn’t be held against them,” Little said. “This is America, after all.”

Other government agencies, including Homeland Security and the Department of Defense, allow outside employment with prior approval. But not everyone thinks it’s a good idea:

…longtime agency watchers said they were shocked to learn that (CIA) agents are allowed to work for private firms — and that the practice raises a number of serious concerns, including the possibility that moonlighting agents will have conflicts of interests.

“I’m surprised, and I think it looks bad,” said law professor John Radsan, a former CIA employee who has written extensively about internal checks on the intelligence community. “Ideally, [agents] should be fully employed, their loyalty should be fully to the government, and they should be looking to make their careers there.”

It looks particularly bad at a time when Wall Street and the government seem inseparable. And the CIA apparently views the moonlighting policy as a way to “keep talent,” to borrow that tired Wall Street phrase. But if you’re a human lie detector, and you can make extra money in the private sector, why not?

What do you think about this?

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