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Congressional Panel Accused Of Leaking Insider Information, Refuses To Comply With Probe

Tyler Durden's picture




 

It was back in April 2013, when the WSJ reported of a peculiar surge in various health insurance stocks that came moments after a report from Height Securities, a Washington-based investment-research firm that ferrets out policy news and analysis for investors, correctly predicted the Obama administration would reverse course on big spending cuts that would have hit health insurers. The note was released about 15 minutes before markets closed on Monday, April 1, leading to the following surge in the biggest Obamacare beneficiaries.

Needless to say, it is quite clear that non-public info was leaked by US legislators to a "expert network" consulting company, which in turn further propagated the information to its own clients, making them profits of up to 8.6% in milliseconds. As the WSJ summarized at the time, "The resulting stock surge is one of the most dramatic examples in recent years of how tips and insights from Washington's burgeoning political-intelligence business can drive trading on Wall Street, potentially leading to big profits for those in the know."

It took the SEC 14 months to finally figure out there may have been something illegal with this setup and as the WSJ followed up three weeks ago, "prosecutors are gathering evidence for a grand-jury probe into whether congressional staff helped tip Wall Street traders to a change in health-care policy, an indication the long-running investigation has entered a more serious phase."

Public documents show federal law-enforcement officials and the Securities and Exchange Commission are seeking records and other evidence from the House Ways and Means Committee and a top congressional health-care aide, Brian Sutter, staff director of the committee's health-care subpanel.

 

The SEC sent subpoenas to the House committee and Mr. Sutter seeking documents and testimony in the matter, according to documents made public by Rep. David Camp (R., Mich.), who is the committee chairman, and Mr. Sutter.

 

Separately, the Justice Department issued a subpoena to Mr. Sutter to compel him to testify before a federal grand jury at the U.S. District Court for the Southern District of New York, according to Mr. Sutter's public disclosure, which was included in the congressional record per House rules. Committee officials wouldn't say whether Mr. Sutter has testified. A spokesman for the Ways and Means Committee, speaking for Mr. Sutter, declined to comment.

Furthermore, the SEC went to court June 20 to enforce subpoenas it issued as it sought information related to a probe into whether Sutter leaked material nonpublic information about Medicare reimbursement rates to Mark Hayes, a lobbyist at Greenberg Traurig LLP.

As Reuters reported previously, the SEC said Hayes spoke with Sutter the same day that the Centers for Medicare and Medicaid Services announced reimbursement rates for the Medicare Advantage program. The regulator said Hayes then emailed the brokerage firm Height Securities, which shortly afterward sent its clients a "flash alert" suggesting the deal could help insurance companies such as Humana and Health Net, leading to the surge shown above.

In brief: what Sutter did is effecitvely leaking material non-public information which ultimately made its way to paying clients of Height, and nobody else, allowing them to generate quick, and substantial profits. The information had not been made public yet to the general public.

What is unknown is whether Sutter and other members of the House Ways and Means committee also traded concurrently on this non-public information, making some whopping profits in the process too. And it appears that is precisely how Sutter et al want to keep it.

According to Reuters, the Ways and Means panel said on Friday it should not have to comply with a federal regulator's demand for documents sought for an insider-trading probe involving the staff director of a subcommittee and a lobbyist.

The House Ways and Means Committee argued in a court filing that U.S. District Judge Paul Gardephe in New York should deny the Securities and Exchange Commission's attempt to subpoena documents from the committee and its healthcare subcommittee staff director Brian Sutter.

 

The SEC went to court June 20 to enforce subpoenas it issued as it sought information related to a probe into whether Sutter leaked material nonpublic information about Medicare reimbursement rates to Mark Hayes, a lobbyist at Greenberg Traurig LLP.

 

The committee's filing called the SEC subpoena "a remarkable fishing expedition for congressional records." It said the U.S. Constitution shields the panel and Sutter from being compelled to testify or produce documents.

Wait, the Constitution protects leakers of material, non-public inside information, disseminated to curry favor with various paying clients and lobbyists, and to further one's career, not to mention paycheck? Maybe the committee can point to just what page in the constitution they are looking at as we can't seem to find this particular section. We even checked the amendments - it's missing there too.

As Reuters concludes, "the dispute between the House committee and the regulator could test the boundary of the SEC's powers to compel the legislative branch of government to cooperate with its enforcement of the federal securities laws."

Spoiler alert - we are happy to reveal the answer already: the SEC's "powers to compel" will be found null and void, because while as we already noted recently while central bankers are clearly above the law, so are those who actually make it: because when it comes to insider trading, US Congress is happy to dole out fire and brimstone on all those who abuse their fiduciary responsibility or happen to prove the strong form of the EMT, but when it comes to Congress, it's look but don't touch, and certainly don't investigate.

After all corrupt Congressmen have only a few years in which to become rich, and if abuse of insider trading laws is what it takes, so be it.

 

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Sat, 07/05/2014 - 11:05 | 4926443 Ban KKiller
Ban KKiller's picture

Congress is exempt from crime as they are complicit. Gold finger up!

Sat, 07/05/2014 - 11:17 | 4926461 max2205
max2205's picture

 

 

 

 

 

 

 

 

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Sat, 07/05/2014 - 11:52 | 4926506 linniepar
linniepar's picture

Pretty sure there will be some nail guns and broken hard drives in the near future...

Sat, 07/05/2014 - 17:56 | 4927363 Buck Johnson
Buck Johnson's picture

Yep, nailguns and broke hard drives are coming up.  No wonder we are so  corrupt, even our own people can't look past the infighting of right versus left to see that all of these yokels are padding their pockets at the expense of out country and out us.  Empires crumble from within, when the leaders are grabbing for money and so blatantly, they are on their way out and to a nice place on some island somewhere.

Sat, 07/05/2014 - 11:59 | 4926509 hedgeless_horseman
hedgeless_horseman's picture

 

 

Wait, the Constitution protects leakers of material, non-public inside information, disseminated to curry favor with various paying clients and lobbyists, and to further one's career, not to mention paycheck? Maybe the committee can point to just what page in the constitution they are looking at as we can't seem to find this particular section. We even checked the amendments - it's missing there too.

Exactly.

 

Sat, 07/05/2014 - 16:36 | 4927231 MontgomeryScott
MontgomeryScott's picture

Unfortunately:

Article 1, Section 6

They shall in all Cases, except Treason, Felony and Breach of the Peace, be privileged from Arrest during their Attendance at the Session of their respective Houses, and in going to and returning from the same; and for any Speech or Debate in either House, they shall not be questioned in any other Place.

 

Sun, 07/06/2014 - 04:49 | 4928459 monad
monad's picture

Treason is right.

Sun, 07/06/2014 - 10:29 | 4928809 MidwestJester
MidwestJester's picture

Insider trading = felony, right?!?

Sat, 07/05/2014 - 11:59 | 4926526 AlaricBalth
AlaricBalth's picture

The House Ways and Means Committee is the lead investigator of the IRS scandal. The SEC is under the jurisdiction of the Executive Branch. This investigation is the latest salvo in a war between the Executive (Obama) and the Legislative (Republican controlled House). Lets hope it is mutually assured destruction.

Sat, 07/05/2014 - 13:20 | 4926758 manofthenorth
manofthenorth's picture

PITCHFORKS AND TORCHES IT IS THEN !!!!!!

IF WE THE PEOPLE DO NOT HAVE THE INTESTINAL FORTITUDE TO TAKE THESE ROTTEN, BABY EATING, SATANIST MOTHER FUCKERS TO TASK THEN THERE IS NO POINT IN COMPLAINING ABOUT ANY OF THIS SHIT.

I WOULD HAVE LIKED TO THINK FOR THE SAKE OF MY FAMILY THAT THIS COULD HAVE BEEN SOMEHOW RESOLVED WITH PEACEFUL NON-COMPLIANCE.

IT WOULD APPEAR THAT THERE MUST BE A BLOOD TAX.

THE RIOTS OF THE PAST WILL LOOK LIKE A BOY SCOUT JAMBOREE COMPARED TO WHAT IS RAPIDLY APPROACHING.

Sat, 07/05/2014 - 11:30 | 4926473 Jumbotron
Jumbotron's picture

They need to roll S.W.A.T., Homeland Security, D.E.A. and every other heavily armed agency up in there with flash bangs and jack boots to their faces.....just to let them feel what we go through out here in the real world.

Just in case any of you didn't know it yet.....this the "ZeroHedge" of the police state we live in now.  Great info everyday....

 

http://www.informationliberation.com/

 

Sat, 07/05/2014 - 11:33 | 4926476 Jumbotron
Jumbotron's picture

Here's an example from Information Liberation.

Why do we need this in Florida.....and the city is NOT Miami ?

http://www.informationliberation.com/?id=47815

Sat, 07/05/2014 - 13:24 | 4926768 manofthenorth
manofthenorth's picture

Those will be used to protect the occupants of the gated communities from the raging mad FSA.

Sat, 07/05/2014 - 11:46 | 4926492 XitSam
XitSam's picture

It's an exclusive club and you ain't in it!

Sat, 07/05/2014 - 11:06 | 4926444 Seasmoke
Seasmoke's picture

I find it sad , that people still follow the laws , made by others , to benefit the others. 

 

The revolution will not be televised. Because there will be no revolutions. 

Sat, 07/05/2014 - 11:18 | 4926462 greatbeard
greatbeard's picture

>> there will be no revolutions.

I already had mine and it was bloodless.  I simply said fuch the system and bailed out.  No voting, no insurance, no taxes (cept a tiny bit of property).  Works for me.

Sat, 07/05/2014 - 12:03 | 4926546 CheapBastard
CheapBastard's picture

"No one could be reached for comment."

 

They're busy "crashing" their computers and hammering their hard drives to bits ... accidentally and unintentionally, of course.

Sat, 07/05/2014 - 11:06 | 4926445 _ConanTheLibert...
_ConanTheLibertarian_'s picture

A world of criminals who operate above the law.

Sat, 07/05/2014 - 11:10 | 4926446 Manthong
Manthong's picture

Good thing he's a Republic-rat.

The real PTB of today will assure "justice".

 

Sat, 07/05/2014 - 14:05 | 4926887 SDShack
SDShack's picture

He should just plead The John Corzine Defense. All will be forgiven in a matter of seconds.

Sat, 07/05/2014 - 11:08 | 4926447 Irving Phelps
Irving Phelps's picture

Let's avoid wasting time with appeals and hang the fuckers on the steps of the Capital. It's the culture of Washington so we already know he's fucking guilty! I say, let's grow some balls and take back "government for the people"!!!!

Sat, 07/05/2014 - 11:09 | 4926450 Pairadimes
Pairadimes's picture

What is all this blather about the rule of law? That is so 1900's.

Sat, 07/05/2014 - 11:13 | 4926456 toady
toady's picture

The rich get richer while they DAK

Sat, 07/05/2014 - 11:14 | 4926458 what's that smell
what's that smell's picture

little piggy making money; randroids and free market clowns should be celebrating.

"the invisible hand of god bestows favors upon his chosen." puritan lullaby.

 

Sat, 07/05/2014 - 11:26 | 4926468 TheReplacement
TheReplacement's picture

Hey tardo,

A free market this is not.

Sincerely,

Someone with a brain

 

Sat, 07/05/2014 - 11:50 | 4926498 disabledvet
disabledvet's picture

Well, a conscience certainly. "We're not changing Wall Street anytime soon here...nor it's interactions with Washington."

We try yet nay, veerily "just a fart in Cat 5 Hurricane."

Sat, 07/05/2014 - 12:16 | 4926584 GCT
GCT's picture

I hope that was sarcism whats that smell.

People here want to make money doing it the hard way and I think the last time I checked this has nothing to do with a free market.  The people involved should be jailed for it but they will not and most people will never know it even happened.  Thats the sad part of it all.

Free markets my ass!

Sat, 07/05/2014 - 11:15 | 4926459 yogibear
yogibear's picture

Honesty is now the exception. Corruption/fraud and  lying is now the rule.

Sat, 07/05/2014 - 11:16 | 4926460 Reaper
Reaper's picture

Everything is filth in DC.

Sat, 07/05/2014 - 11:30 | 4926474 disabledvet
disabledvet's picture

There still sits "the John Quincy Adams chair" if you take a tour of of the actual Capitol Building (something I did as a kid.) back then the buying...errr "Lobbying"...occurred, "right in the lobby" meaning on the actual premise of the Capitol.

The name stuck for obvious reasons...and the purpose of that chair was that if offered the best listening post to hear what matters were being literally "in the open" (albeit in hushed tones.).

In short "simply change the law to make lobbying legal but that it must be done on site"(in the actuall Halls of Congress) "in order to be legal ."

Sat, 07/05/2014 - 11:39 | 4926483 tony wilson
tony wilson's picture

patel but but but

birdy num nums

yes pleasings.

is he indian or a paki?

i bet he is not a jewish.

 

http://www.youtube.com/watch?v=ajMqhpCBPAY

Sat, 07/05/2014 - 11:39 | 4926485 wmbz
wmbz's picture

The D.C. cesspool is 100% corrupt... period!

The good news for the lying theives in D.C. is that the public in general are far more interested in some dimwitted girl with an ass the size of a VW beetle and her usless family. They are clueless as to just how completely screwed they really are.

Why? Because voters are f-ing stupid!

Sat, 07/05/2014 - 11:51 | 4926503 LetsGetPhysical
LetsGetPhysical's picture

Law abiding citizen = sucker

Subvert the system at every chance you get. People that "follow the rules" are chumps. There are no rules, just the law of the jungle. 

Sat, 07/05/2014 - 11:52 | 4926504 ptoemmes
ptoemmes's picture

Maybe here's a case where NSA snooping - and FBI piggybackng on NSA capabilities - might be useful.

Not that I am advocating the way NSA-FBI-CIA operates in this regard, but as long as they operate as they do why not get some truly "bad guys", you know, financial terrorists.

 

 

Sat, 07/05/2014 - 11:57 | 4926521 lunaticfringe
lunaticfringe's picture

Here's the bottom line. Most folks if not all, would have done the same thing. The harsh truth is that I don't mind insider trading just so long as I am one of the insiders.

I'm not angry that people, greedy people, do such things. That shit has been going on forever. My question is- when if ever is our culture going to get serious about morality and doing the right thing or enforcing a rule of law with consequences? These fucksticks just flaunt their illegal conduct and make some small effort- if any- at trying to hide it.

The tree of liberty grows thirsty.

Sat, 07/05/2014 - 11:59 | 4926529 sleepingbeauty
sleepingbeauty's picture

And no emails had to be lost!!

Sat, 07/05/2014 - 12:03 | 4926548 assistedliving
assistedliving's picture

said it before and say it again.  Once Wall St realizes the danger of NSA; only then

will we start to see change.  sorry but thats the way it is in Ameri$a

Sat, 07/05/2014 - 12:14 | 4926580 JR
JR's picture

While millions sleep, Congress steals their assets…and covers its tracks with lies, complicated legalese, and media cooperation. And, all the while, Big Brother, is watching YOU! It’s the same Congress that…

“gutted a so-called ‘anti-NSA spying bill’ to the point that its original House sponsor, Republican Justin Amash of Michigan, withdrew his support.

“Amash wrote on his Facebook page: ‘This morning’s bill maintains and codifies a large-scale, unconstitutional domestic spying program. It claims to end “bulk collection” of Americans’ data only in a very technical sense: The bill prohibits the government from, for example, ordering a telephone company to turn over all its call records every day. But the bill was so weakened in behind-the-scenes negotiation over the last week that the government still can order – without probable cause – a telephone company to turn over all call records for “area code 616”: or for “phone calls made east of the Mississippi.” The bill green-lights the government’s massive data collection activities that sweep up Americans’ record in violation of the Fourth Amendment.’

“Amash is one of but a handful of Congressmen truly dedicated to opposing the totalitarian surveillance state that is otherwise enthusiastically endorsed by both Democrats and Republicans.” –The Nationalist Times, June 2014

Sat, 07/05/2014 - 12:21 | 4926595 GCT
GCT's picture

+1000 JR

This spying program will never go away no matter what officials say.  The government is now afraid of their citizens so they must now spy, and make it public so the dumbasses of the world support their spying. 

Nothing is going to change anytime soon.  Things will just get worse as they educate our chuildren to report their parents if they do not comply with gov regulations .  And we called Hitler a monster and we are headed down the same road only more covertly.

Sat, 07/05/2014 - 12:58 | 4926693 novictim
novictim's picture

Right on JR.

Might I suggest that you also acknowledge who MUST be the real advocates of the police state?  It is not one individual or some faceless conspiracy.  These players are out in the open.  From the lobby for security services to police unions to the prison industrial complex to the privacy invaders at Comcast and Verizon and Google to the financial institutions who fear popular justice, I suggest that these are the folks driving the bus.

We have an oligarchy/plutocracy.  These folks don't hide nor do they need to hide.

The people are broke.  They will rebel and it will be contained, or so the oligarchs think.  So far, the 0.01% are correct.

Those who run the worlds corporate powers have the NSA as well as this bought-and-paid-for Government as their solution to the inevitable popular backlash. 

Our only hope is to organize and get political.

Sat, 07/05/2014 - 13:35 | 4926798 manofthenorth
manofthenorth's picture
“One of the saddest lessons of history is this: If we’ve been bamboozled long enough, we tend to reject any evidence of the bamboozle. We’re no longer interested in finding out the truth. The bamboozle has captured us. It’s simply too painful to acknowledge, even to ourselves, that we’ve been taken. Once you give a charlatan power over you, you almost never get it back.”

-Carl Sagan

'Tolerance And Apathy Are The Last Virtues Of A Dying Society'
- Aristotle

"The more we do to you, the less you seem to believe we are
doing it." - Dr. Joseph Mengele

History tells us there will be blood.

Sat, 07/05/2014 - 12:46 | 4926663 novictim
novictim's picture

We no longer have a representative democracy.  We have a plutocracy.  

All the members of this Congressional Panel, whether they like it or not, rely on corporate campaign funds and, therefore, the corporations are the only "CONSTITUENT" that matters.

The will of the people, justice, the needs of the many, fairness...none of this is relevant.

If you want your democracy back, whether here in the USA or in RUSSIA or some other European country or Asian country then you MUST work to build a movement to stop corporate money entering into your political campaign finance system.

Get to work.  Fix this.  'cause The Shit is going down and this isn't going to end well for any of us.

Think mass starvation.  Riots.  Police state.  You can't let that happen.

Sat, 07/05/2014 - 13:13 | 4926741 MayIMommaDogFac...
MayIMommaDogFace2theBananaPatch's picture

Selective application of law in FULL EFFECT!!!

Guess whether it applies to you!

Sat, 07/05/2014 - 14:25 | 4926954 boattrash
boattrash's picture

MayIM, not that rule of law applies to us "Little People" anymore, but here are some codes that we should all keep in mind.

http://www.fbi.gov/about-us/investigate/civilrights/federal-statutes/#se...

Sat, 07/05/2014 - 13:24 | 4926769 kchrisc
kchrisc's picture

I would say that the guillotine list just got longer, but most of them were already on it.

Sat, 07/05/2014 - 13:32 | 4926795 world_debt_slave
world_debt_slave's picture

only the stupid don't know that CON-gressman are above the law.

Sat, 07/05/2014 - 14:11 | 4926906 kchrisc
kchrisc's picture

"...above the law," however, below the guillotine.

Sat, 07/05/2014 - 14:39 | 4926981 Chuck Knoblauch
Chuck Knoblauch's picture

Yet, many of you idiots keep voting for them.

Do you enjoy cutting youselves with knives too?

Sat, 07/05/2014 - 14:46 | 4926996 MedicalQuack
MedicalQuack's picture

Well, last year Humana got into trouble with their PR firm and had to fire them abruptly after Senator Grassley made some inquiries.

http://ducknetweb.blogspot.com/2013/04/law-firm-states-they-will-no-long...

Now we can move on to United which is also a big area of question all the time as they are moving in the direction of the banks with "too big to fail" and had one of their executives appointed to the #2 position at CMS too.

http://ducknetweb.blogspot.com/2014/06/how-hard-did-united-have-to-lobby...

I also remind myself that United is a company that has a history too with what I believe is the biggest derivative fine on record back to 2008 I think and the old Ingenix algorithmic formula that paid doctors short for 15 years, just settled in the last couple of years for the AMA.

Its' all thieves all the way around.

Sat, 07/05/2014 - 14:49 | 4927003 buzzsaw99
buzzsaw99's picture

justice department - lulz

Sat, 07/05/2014 - 15:03 | 4927036 rosiescenario
rosiescenario's picture

"It took the SEC 14 months to finally figure out there may have been something illega..."

 

Well, that appears to be an improvement over their non-handling of the info they were given on Madoff.....only 14 months....

Sat, 07/05/2014 - 20:03 | 4927641 WTFUD
WTFUD's picture

It is a Free Market; A free for all at the top and a free to gaze on numbly for everyone else from the side lines.

Sat, 07/05/2014 - 22:47 | 4928056 Aussiekiwi
Aussiekiwi's picture

Love it, when your caught, just tell them to fuck off and refuse to play by their rules, tell them their rules don't apply to your group, classic.

Sun, 07/06/2014 - 04:41 | 4928448 monad
Sun, 07/06/2014 - 06:48 | 4928531 AdvancingTime
AdvancingTime's picture

 In an investigation about two years ago 60 Minutes uncovered evidence of several instances of insider trading among prominent government officials. In a hurry then to save our public servants from embarrassment, President Barack Obama jumped on board. "Send me a bill that bans insider trading by members of Congress," the president declared in his 2012 State of the Union address. "I will sign it tomorrow."

The bill sailed through the Senate on a 96-3 vote, passed the House 417-2 and Obama promptly signed it, noting that its disclosure, and accountability requirements would apply to and demand transparency from virtually everyone in government who had access to inside financial information. Now this has been undone, my tip off was a April 27th 2013 Chicago Tribune editorial that reported Congress had repealed part of the STOCK Act. More on this subject in the article below.

http://brucewilds.blogspot.com/2013/04/washington-insider-trading-is-bac...

Sun, 07/06/2014 - 07:43 | 4928578 overmedicatedun...
overmedicatedundersexed's picture

I am sure the controlled media will beat congress 24/7 to right this crime, just like they did the market crash and naked short sales in 08...holding breath turning blue- "it's a big club and your not in IT." g carlin rest in peace

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