Congress Still Fighting SEC's Investigation Of Alleged Insider Trading By Its Members

from the 'pretty-sure-we're-above-the-law,-judge' dept

Congress is once again declaring its willingness to hold everyone in the nation accountable for their actions, present party excepted.

Back in 2011, it was revealed that members of Congress were participating in insider trading. Spending a great deal of time conversing with lobbyists tends to result in the discussion of information that has yet to be made public. Legislators, being the opportunists they are, chose to buy and sell stock based on this insider info. Lobbyists -- also opportunists -- sometimes did the same thing. And it was all perfectly legal... at least for Congress.

This revelation did nothing to increase the public's goodwill towards its so-called "representatives." With its approval percentage (15%) sliding below that of Bernie Madoff's personal loan applications, Congress swiftly acted to close this loophole in the law.

Two years later, with everyone safely re-elected, Congress quietly excised the disclosure requirement in the new law, making it virtually impossible to verify whether or not it was actually playing by the rules it had made for itself. Predictably, it called the disclosure of such information a "national security risk."

Meanwhile, the SEC opened an investigation into Congressional insider trading related to health insurance companies. Congress refused to answer subpoenas or provide documents to the Commission. When ordered to by a federal judge, the House Ways and Means Committee gently explained that it could do whatever the fuck it wanted to.

The U.S. House Ways and Means Committee and a top staff member say the panel and its employees are "absolutely immune" from having to comply with subpoenas from a federal regulator in an insider-trading probe.
Two years later, Congress is still arguing that rules and laws are for people who can't write their own rules and laws. Judge Paul Gardephe didn't buy Congress' arguments that its conversations with lobbyists were so "privileged" they couldn't be examined by another federal agency. He also pointed out that the "immunity" it relied on was carved out by the very law they had passed to address insider trading a steep drop in approval ratings.
On November 13, U.S. District Judge Paul Gardephe agreed with most of the SEC’s claims and ordered Congress to comply with the subpoena within 10 days. “Members of Congress and congressional employees are not exempt from the insider trading prohibitions arising under the securities laws,” he wrote. Gardephe reminded the attorneys that “Congress barred such claims of immunity when it adopted” the STOCK Act.
Congress' top lawyer fought back, claiming certain, very specific words were missing from the STOCK Act and that legislators' immunity was still intact.
Kerry W. Kircher, the House general counsel, requested more time. Then, shortly before Thanksgiving, on November 25, he filed a motion to appeal the subpoena to the 2nd Circuit. Kircher argued that the STOCK Act did not explicitly authorize the SEC to issue subpoenas to Congress, even to investigate insider trading.
This may not result in the investigation being scuttled or the lawsuit being tossed, but it does buy Congress more time to figure out its next accountability-dodging move. Meanwhile, Congress members are doing what they can to ensure the battle the SEC is waging to at least hold them as accountable as their own STOCK Act promised they would, will be long, expensive and hopefully, ultimately fruitless. These efforts are also shady as hell.
Away from the spotlight, however, congressional leaders continue to fight enforcement and to shore up the target of the SEC inquiry. Rep. Pat Tiberi, R-Ohio, and Rep. Diane Black, R-Tenn., two lawmakers who served on the same committee as Sutter, have used PAC money to donate to the legal defense fund set up to defend him.
Campaign funding -- itself a toxic wasteland where morality and ideals go to die -- is being rerouted to keep Bruce Sutter, a former Ways and Means Committee member who allegedly passed on non-public Medicare reimbursement information to a lobbyist for law firm Greenberg Taurig. Not only will Congress members let nothing stand in the way of personally profiting from their time in office, they'll also apparently ensure those who previously got away with it will continue to elude being held accountable.


Reader Comments

Subscribe: RSS

View by: Time | Thread


  • icon
    That One Guy (profile), 3 Dec 2015 @ 1:05am

    "I am not a crook... and you don't have the power or authority to say otherwise."

    The U.S. House Ways and Means Committee and a top staff member say the panel and its employees are "absolutely immune" from having to comply with subpoenas from a federal regulator in an insider-trading probe.

    Outside of going on national television to admit their guilt, I'd say you'd be hard pressed to find a tactic more effective at admitting guilt than the one they've chosen. They're not even bothering to argue that they're innocent of what they're being investigated of, instead they're going straight to 'You can't touch us'.

    Equally important, if they're arguing that the regulator isn't allowed to do it's job, then they're also admitting that there is no regulation, and the office is nothing more than an empty one, in place simply to give the false appearance of regulation.

    reply to this | link to this | view in chronology ]

    • icon
      Mason Wheeler (profile), 3 Dec 2015 @ 7:22am

      Re: "I am not a crook... and you don't have the power or authority to say otherwise."

      Agreed. There's no more sure way to make yourself look guilty as sin than to say "what I did was not technically illegal."

      reply to this | link to this | view in chronology ]

    • icon
      tqk (profile), 3 Dec 2015 @ 3:31pm

      Re: "I am not a crook... and you don't have the power or authority to say otherwise."

      Kircher argued that the STOCK Act did not explicitly authorize the SEC to issue subpoenas to Congress, even to investigate insider trading.

      Can we use that too? Nobody asks us whether we allow them to prosecute us for insider trading. They'd rightfully laugh at us if we insisted they need our permission to enforce the law.

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 3 Dec 2015 @ 2:51am

    Congressman: "Laws? Where we're going, we don't need...laws."

    reply to this | link to this | view in chronology ]

  • identicon
    Glenn, 3 Dec 2015 @ 3:02am

    The people who make the laws are always above the law.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 3 Dec 2015 @ 5:53am

      Re:

      The people who make the laws are always above the law.

      I remember reading the federal laws against the production and possession of child pornography once and noticing that Congress exempted themselves.

      reply to this | link to this | view in chronology ]

  • icon
    That Anonymous Coward (profile), 3 Dec 2015 @ 3:08am

    It is a corrupt shithole, we should nuke it from orbit and try again. Instead of forcing them to deal with this, we let them distract us with fearmongering.

    If one of us lesser people had done half of what they have done we'd be in jail for a very long time. See because the government has no problem piling on us little people without the means to make it a tough fight. Congress is willing to go to the mat to protect their extra cash income, and hate being held accountable. Shame we don't have term limits or summary execution of them after they have been in office for a while.

    They leave office much richer than when they went in, land cushy jobs that of course are in no way "rewards" for a job well done for their corporate sponsors, all while ignoring reality and voting for who ever paid them the most.

    Imagine that we are in a constant state of war, surveillance, civil unrest, economic inequity all because they vote to line their nest eggs rather than what is good for the country... now open your eyes and see it isn't your imagination.

    reply to this | link to this | view in chronology ]

  • icon
    Violynne (profile), 3 Dec 2015 @ 3:12am

    I've read the Constitution many times in my life, and never once have I ever seen an exclusion to the phrase "We The People".

    It does not say, "We The People, except for us in Congress".

    So why the hell is our government... oh, right. That whole "absolute power" truth is poking me in the head again.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 3 Dec 2015 @ 8:37am

      Re:

      @Violynne:

      there is a provision in the Constitution that states a Senator or Representative cannot be impeded going to their duties. That provision was intended to apply to traveling to the capital for their sessions. That provision has since been mutated to apply to just about anything applying to the Congress' activities, including activities that ordinary people would get into trouble for.

      Why do you thing Senators and Representitives get specially marked license plates for their cars? It's to tell all the police officers they cannot stop that car for any traffic violation; if they do they could be impeding a Congressperson going to their duty. And that even applies when Congress is NOT in session. Yes that's a classic example of 'do as I say, not as I do'.

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 3 Dec 2015 @ 11:19am

        Re: Re:

        Even if that vehicle is swerving into oncoming lanes, hitting other vehicles, running over pedestrians and damaging property ... they can not be stopped because they are "special".

        reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 3 Dec 2015 @ 3:26am

    Anarchy, living without the rule of law, is what the elite practice, while ensuring that the citizens cannot practice anarchy, because it would remove their advantages over the citizens.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 3 Dec 2015 @ 4:32am

    A Match made in ,not sure where... congress and wall street both corrupt to the core , can we expect any group ruled by laws to be anything but , a few morals would go a long way.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 3 Dec 2015 @ 4:42am

    The greatest tragedy of the US is the death of accountability for its leaders. Be they president, politician, law enforcement or CEO.

    reply to this | link to this | view in chronology ]

  • icon
    scatman09 (profile), 3 Dec 2015 @ 4:52am

    we only need 2 changes to fix congressional impropriety

    1. to be elected to congress, your children must serve in the military or be military veterans
    2. (say it with me)CONGRESSIONAL TERM LIMITS

    reply to this | link to this | view in chronology ]

    • icon
      Wickedsmack (profile), 3 Dec 2015 @ 7:07am

      Re: we only need 2 changes to fix congressional impropriety

      I would also like something measurable to gauge their performance as legislaters, every job I've had has come with some sort of metric I have to meet or excede. I would like to see tangible real world goals set for congress and if they don't make it, they aren't allowed to run again until they meet it. Also, no pay for life...that shit is ridiculous.

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 3 Dec 2015 @ 5:25am

    leisure class

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 3 Dec 2015 @ 5:26am

    it is VERY clear that sheeple are not allowed to make money in the stock market in any way or form.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 3 Dec 2015 @ 6:07am

    Time for D.C. area supermarkets to stock up on incontinence products. After we drop the RICO laws on the capitol, the mops and buckets. How dare thy not put a spot for "No Confidence" on my ballot.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 3 Dec 2015 @ 6:24am

    It would be a slick move for those in congress with clean hands, if there are any, to publicly state their innocence and challenge other members to come clean.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 3 Dec 2015 @ 7:01am

    national security risk

    i'm learning to laugh when i see these words in this particular order.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 3 Dec 2015 @ 7:19am

    You know the golden rule: Whoever has the gold, makes the rules.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 3 Dec 2015 @ 10:25am

    of course it is a national security risk when the nation is being ruled by criminal despots.

    Expose them and their security will be at risk and what endangers the elite endangers the nation

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 3 Dec 2015 @ 10:38am

    On the up side, at least there's an issue that transcends partisan politics and lets all members of Congress unite in a common goal.

    reply to this | link to this | view in chronology ]

  • icon
    connermac725 (profile), 3 Dec 2015 @ 11:15am

    A perfect example

    Of why they should NOT be allowed to have lifetime jobs term limits should be adopted for these crooks

    reply to this | link to this | view in chronology ]

  • identicon
    David, 6 Dec 2015 @ 10:24am

    Approval ratings...

    Well, I expect the Congress member approval rating to further fall from its current rating, solidly below used car salesmen, to below that of used car thieves.

    If they keep it up, they'll fall below the approval rating of terrorists. After all, the latter do less damage to the Constitution and waste less taxpayer money.

    reply to this | link to this | view in chronology ]


Add Your Comment

Have a Techdirt Account? Sign in now. Want one? Register here
Get Techdirt’s Daily Email
Use markdown for basic formatting. HTML is no longer supported.
  Save me a cookie
Close
Have a Techdirt Account? Sign in now. Want one? Register here
Get Techdirt’s Daily Email
Use markdown for basic formatting. HTML is no longer supported.
  Save me a cookie
Follow Techdirt
Techdirt Gear
Shop Now: I Invented Email
Advertisement
Report this ad  |  Hide Techdirt ads
Essential Reading
Techdirt Deals
Report this ad  |  Hide Techdirt ads
Techdirt Insider Chat
Advertisement
Report this ad  |  Hide Techdirt ads
Recent Stories
Advertisement
Report this ad  |  Hide Techdirt ads

Close

Email This

This feature is only available to registered users. Register or sign in to use it.