“No results were found that matched your query. Please modify your query and try again.”
That’s what you’ll see if you search the SEC’s website for information on “political intelligence.” The site has over 5,200 results for “insider trading.” Yet reading today’s Post stories on the topic give no indication that the agency is proceeding cautiously in terms of application of insider trading rules to political intelligence. You might think that stringent enforcement should follow careful and transparent consideration of the SEC’s proper role, if any, in policing political intelligence. Especially given congressional interest in the topic, as evidenced by the STOCK Act’s requirement for a report on the topic. But recent news reflects that the agency is apparently moving ahead, notwithstanding the lack of legislative direction.
Greenberg Traurig is in the middle of the scenario described in one report.
A lobbyist hears from “very credible sources” that the White House is going to reverse a major health-care proposal. He tells a client in an e-mail, and that person then tells his own clients in a research note.
We’ve had a few weeks of breathless reports and editorials on the topic. The reports accelerated after a fairly sedate GAO report seemed to urge caution. The report contains a number of references to insider trading, and notes, “Members of Congress, and employees of Congress are not exempt from insider trading prohibitions under securities laws.” Absent in much of the reporting is the propriety of employing insider trading rules to elected officials and staff, however.
Another story in today’s Post doesn’t indicate that the SEC has shown interest in the circumstances surrounding a call with a Senate aide. According to the story,
On the same morning a congressional staffer told investors in a private call that odds were improving for a government decision that would help medical insurers, trading spiked in a major health-care company.
The private call, arranged by a consulting firm called Capitol Street, took place the morning of March 18. At 11:05 a.m., a certain form of speculative trading in Humana, the health insurer, jumped. That day, there was nearly 10 times as much volume as any day in the previous two weeks.
With these stories in the news, there’s hardly any note of the serious problems related to the SEC’s use of insider trading theories in political intelligence scenarios. It will probably take prolonged litigation, under this approach, for principles and guidelines to develop. In the meantime, the SEC seems proficient in generating subpoenas.