Dem wants Wall Street tipsters out in the open

Rep. Louise Slaughter (D-N.Y.) is trying to reignite the debate over the political intelligence industry that funnels information from Congress to Wall Street. 

The New York Democrat is reviving legislation that would require more disclosure of the shadowy industry, which sees tipsters descend on Capitol Hill in search of information that can be used for profitable trades. 

{mosads}Little is known about the prevalence of political intelligence work, though some estimate it could be a $400 million per year industry.   

“If it’s worth $400 million a year, it’s worth some oversight,” Slaughter told reporters in the Capitol Thursday. 

Under her bill, which Slaughter also introduced in 2014, political intelligence firms would have to publicly declare their work on disclosure forms, just as lobbyists now do.

She said such a requirement would help members and staff, who often might not even realize they are talking to a political intelligence operative. 

Similar disclosure language was nearly part of the Stop Trading On Congressional Knowledge (STOCK) Act of 2012, one of the last majorly bipartisan bills passed by Congress.

After a “60 Minutes” report questioned whether members of Congress were personally profiting by trading on private legislative information, there was a rush to sign on to the STOCK Act, which explicitly barred insider trading by members of Congress.

As the bill worked its way through Congress, language was included to require additional disclosure by political intelligence firms. The bill passed the Senate with that language intact, but was stripped out by House Republican leaders when it came back to their chamber.

Critics accused former Rep. Eric Cantor (R-Va.), then the House Majority Leader, of removing the language at the behest of the financial industry.

Opponents of the STOCK ACT provision argued that it is overly broad, and depending on how it was interpreted, could bring added scrutiny on unintended targets, like the media.

The Government Accountability Office has said it would be incredibly difficult to define what constitutes “political intelligence” — the specific ferreting out of nuggets of non-public information from congressional sources to inform trading — versus traditional research, reporting or other lobbying efforts.

Slaughter’s bill has two cosponsors, Reps. Tim Walz (D-Minn.) and John Duncan (R-Tenn.), but she acknowledges that passing it is likely to be an uphill climb.

But Slaughter points to Cantor’s stunning primary loss to Rep. Dave Brat (R-Va.), in which Brat made Cantor’s work on the STOCK Act a campaign attack, and a pending court case on political intelligence, as reasons to believe the bill could gain traction. 

The Securities and Exchange Commission is currently embroiled in a legal battle over its probe into whether a former staffer on the House Ways and Means Committee tipped investors off to a government move that would cause a spike in health care stocks. 

The regulator has issued a subpoena to the Ways and Means committee for any communications with traders. The panel resisted that demand, but a federal court ruled in November that it must comply. The committee is currently appealing that ruling, freezing activity on the case until a decision is handed down. 

Slaughter says the continued judicial focus on the matter can only be a boon to her efforts. 

And she does have a high profile bipartisan backer for her bill — Senate Judiciary Chairman Chuck Grassley (R-Iowa). It was Grassley who pushed hard to keep the political intelligence language in the STOCK Act, and he publicly criticized his House Republican counterparts when they stripped it from the bill. 

Shortly after Slaughter introduced her bill on Thursday, Grassley introduced a companion bill in the Senate.

But Grassley has his hands full elsewhere. In addition to being up for reelection this year, Grassley is at the center of the bitter battle over Supreme Court nominee Merrick Garland.

As a House Democrat in the minority, Slaughter acknowledged there is little she can do to get legislation a vote, other than try and call attention to it.

“We don’t do legislation. We do bills to punish Obama,” she said of the Republican House.