UK's 'cash for access' affair

I had to pinch myself in disbelief when I read this. UK's fund managers pay brokers for getting access to the latter's CEO clients. The payment rate is as much as $20,000 an hour and total spending on this account in the sector runs into millions, FT reports.

Ed Harley, head of asset management supervision at the FSA, raised the prospect of multimillion-pound fines for fund managers found to be in breach of its rules......Mr Harley said analysis by the FSA of the use of client commissions by 15 asset managers found large payments that were “hard to justify”. The bulk of them covered payments for corporate access, alongside smaller sums for access to market data.

Why would fund managers pay for access to CEOs? Presumably, they glean information that is not otherwise available? There is public disclosure of information and CEOs take conference calls from analysts and fund managers after results are disclosed. So, what exactly is to be gained by meeting the CEOs in person? And if there is something to be gained, does not that not qualify as insider information?

Incidentally, ending cash payments for access may not solve the problem. There are so many other ways in which fund managers can take care of cooperative brokers and CEOs.