Overwhelming passage of two versions of legislation targeting
those who would convert political capital into the real thing
demonstrates there's no time like an election year for lawgivers to
By a 417-2 margin, the U.S. House of Representatives last week
approved the Stop Trading on Congressional Knowledge Act,
legislation that had gone nowhere until a "60 Minutes" piece in
November detailed the stock trading habits of House Minority Leader
Nancy Pelosi, D-Calif., and other members of Congress. The CBS
report relied on "Throw Them All Out," a book by Peter Schweizer
that documented how often the investments of members of Congress
coincide with knowledge they obtain on the job.
It didn't take long for Congress, burdened by a public approval
rating in the single digits, to respond.
Co-sponsors quickly signed on to legislation first introduced in
The latest bill, introduced in March by Reps. Tim Walz, D-Minn.,
and Louise Slaughter, D-N.Y., would prohibit members of Congress and
federal employees from making investment decisions based on
nonpublic information they obtain as part of their jobs. It would
also put restrictions on the "political intelligence" industry,
firms that hedge funds and other investors commission to access the
wealth of nonpublic information available in Washington. That
intelligence can be used to improve their investment decision
Similar legislation was introduced in the Senate and approved by
a 96-3 vote on Feb. 2.
However, there is a major difference between the House and Senate
versions that must be resolved before the bill can be submitted to
President Barack Obama, who has promised to sign it.
The Senate version requires political intelligence operatives to
register and disclose their activities, something lobbyists are
currently required to do.
Those requirements would be more onerous for political
intelligence operatives than they are for lobbyists. An operative
would only have to make one call to be subject to the provisions of
the Senate bill, according to an advisory sent to the clients of
Wiley Rein, another Washington, D.C., law firm.
"The unprecedented -- and potentially far-reaching -- regulation
of 'political intelligence activities' may soon be in place," the
firm has advised its clients.
Covington & Burling, a Washington, D.C., law firm, told clients
that a hedge fund that calls a Congressional staff member in order
to determine the prospects of legislation that would affect the
fund's investments may need to register. The same could be true of a
company that contacts sources in Congress or regulatory agencies
about a potential government response to a merger or acquisition. …