Lawyers from the House of Representatives have filed a petition to block a Securities and Exchange Commission investigation of congressional insider trading on the basis that lawmakers and their staffs should be constitutionally protected from such investigations.
According to The Intercept, a legal team appointed under the authority of House Speaker John Boehner has said that the insider trading probe violates the separation of powers between the legislative and executive branch.
The SEC launched an investigation after House Ways and Means Committee staffer Brian Sutter told a lobbyist about an impending Medicare decision. The information was allegedly shared with clients, resulting in hedge funds trading on health insurance stocks that were to be affected by the upcoming legislation.
House General Counsel Kerry Kircher called the SEC's probe a "remarkable fishing expedition for congressional records," and insisted that it did not have the jurisdiction to issue a subpoena to Sutter, according to The Intercept.
"Communications with lobbyists, of course, are a normal and routine part of committee information-gathering," said a legal brief filed last summer, adding that there "is no room for the SEC to inquire into the committee's or Mr. Sutter's purpose or motives."
The Intercept said that Wall Street firms often hire specialized "political intelligence" lobbyists to glean insider information about government decisions to use in trading strategy, but little is known about the dynamics of the practice because it falls outside the parameters of traditional lobbying law.
"This is hardly the first time Congress has moved to undermine its own ethics rules. In 2011, congressional Republicans quickly abandoned their promise to post the text of bills online 'for at least three days,' before voting on them," The Intercept said.
In 2012, Congress passed the STOCK Act, a measure meant to prevent insider trading among lawmakers and their staffs.
"We all know that Washington is broken and today members of both parties took a big step forward to fix it," Ohio GOP Rep. Bill Johnson said upon passage of the law, according to The Intercept.
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