Senate Judiciary Committee chair Chuck Grassley (R-Iowa) said on Monday that financial sector agents seeking to profit off of inside tips about legislation are harder to detect now than when Congressional leaders killed a high-profile push to shed light on their activities three years ago.
Grassley said that although he still supports the move to subject so-called political intelligence operatives to routine disclosure requirements, the oversight might not be enough to quash a cottage industry that, until 2012, was casually thriving off of insider trading.
“I think that those people who are involved in political intelligence have gotten a lot smarter now,” Grassley said at the National Press Club, shortly after adding that their activity “was very obvious when I got the amendment through the United States Senate.”
The leading Republican senator on legal matters also noted that he still speaks about political intelligence disclosure requirements to Rep. Louise Slaughter (D-N.Y.)—one of the leading proponents of the ethics reform.
Slaughter was also one of the original 2006 sponsors of the Stop Trading on Congressional Knowledge (STOCK) Act, the aforementioned bill, signed into law by President Obama in 2012, which closed a loophole that had legally permitted asset purchases based on non-public information about legislative affairs.
When the STOCK Act passed the Senate, Grassley successfully proposed an amendment that would have forced political intel operatives to file disclosures similar to those lobbyists must submit under the Lobbying Disclosure Act of 1995. The amendment advanced despite being opposed by then-Senate Majority and Minority Leaders Harry Reid (D-Nev.) and Mitch McConnell (R-Ky.).
When the bill was sent to the House, then-House Majority Leader Eric Cantor (R-Va.) stripped the requirement out of the legislation.
Grassley reacted furiously to the change in an interview with Bloomberg news, calling into disrepute the justification offered by Cantor’s staffers–that disclosure requirements could hinder legitimate flows of information. “Doesn’t that take a lot of chutzpah?” he asked. “Are they sincere or not?” Grassley also rhetorically queried. “They’ve got time to sit down and work this out with me. We can find some language that will work out.”
But it was eventually passed in conference committee as amended by Cantor—changes that included, controversially, the erasure of stock trade disclosure requirements for the kin of House members and their staffers. The omission was only discovered by CNN weeks after the law took affect–—an eyebrow raising development, when considering the House Majority Leader’s wife was a hedge fund manager with Chamber of Commerce affiliation. Cantor eventually told CNN the move was “inadvertent” and got Congress to correct the discrepancy between the House and Senate versions.
Cantor was seen as such an impediment to political intelligence reform that Slaughter reintroduced the matter in September, via The Political Intelligence Transparency Act of 2014, just one month after the exiting House Majority Leader immediately resigned his seat.
The political intelligence industry, which is comprised of law firms, lobbyists, and, in the words of The Washington Post, “boutique investigative firms,” was estimated in 2009 to be worth $400 million by a financial sector research outfit—ten years prior, it was worth roughly $200 million, Integrity Research Associate’s investigation found.
A 2013 Government Accountability Office inquiry mandated by the STOCK Act, however, declined to estimate how much political intelligence is collectively worth, noting that its commodities are often provided in conjunction with above-board commercial activities.
Grassley also noted Monday that it would not have been possible for Congress to advance political intelligence reform if not for the efforts of mainstream journalists. An October 2010 Wall Street Journal article, for example, found to little effect that 72 Hill staffers, in the two years prior, had “traded shares of companies that their bosses help oversee.” But a late 2011 “60 Minutes” segment on insider trading in Congress caused something of an uproar.
“It was highlighted quite a bit and it was a difficult sell—that transparency ought to be involved here because transparency brings accountability,” Grassley remarked, giving an implicit hat-tip to the CBS News program.
Months later, President Obama used part of his 2012 State of the Union to call on the legislative branch to quash the practice. As he exited the joint session of Congress, then-Sen. Scott Brown (R-Mass.) told the President he would help the White House pass relevant reforms.
In 2013, the Securities and Exchange Commission, the FBI and the Justice Department, launched probes into the sale of healthcare stocks that occurred allegedly as the result of a lobbyist’s tip. By August 2014, that investigation had grown to include “44 investment funds, including some of the nation’s largest hedge funds and asset-management advisors.”
