Motive of Congress Suspect after Passing Insider Trading Bills
Boselovic, Len, Pittsburgh Post-Gazette (Pittsburgh, PA)
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 find religion.
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 2006.
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 making.
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. …