Dive Brief:
- A U.S. district court announced a decision this week supporting the Securities and Exchange Commission's subpoena to a Congressional House committee and a former top aide regarding a suspected leak of healthcare policy information to Wall Street in 2013.
- The judge said they must comply with numerous, but not all, parts of the subpoena in the insider-trading investigation. There was no immediate word on whether Congress would appeal the decision.
- The issue revolves around an investigation into an alert sent from research firm Height Securities to its Wall Street clients on April 1, 2013, that predicted a change in government policy favorable to major health insurers, and a subsequent market surge.
Dive Insight:
The case is being closely watched because it is the first to legally test the practice in which policy-research firms assist Wall Street firms in making investment decisions based on government policy information, as The Wall Street Journal reports. Legislation passed in 2012 stipulated congressional officials are barred from trading based on inside information or sharing tips with Wall Street.
The SEC first issued its subpoenas in 2014 to the House Ways and Means Committee and a healthcare aide on the panel, Brian Sutter. At the time, House lawyers argued the information sought was protected under the Constitution's speech or debate clause, but this week's judge said the clause “does not protect the dissemination of information outside of Congress.”
The ruling determined the SEC couldn't require information directly related to “legislative activity" but could require information outside of that scope.