A new target for the IRS, The SEC and employees.

Via The Jurist

The Securities and Exchange Commission (SEC) on Friday filed a lawsuit in the US District Court for the Southern District of New York hoping to compel Congress to comply with subpoenas it received requesting information on an insider trading case the commission is investigating. The subpoenas ask for documents and information from members of the House Committee on Ways and Means and from Brian Sutter, a top congressional health-care aid, to assist in its insider-trading investigation. Federal investigators claim they have evidence indicating that Sutter, in April 2013, illegally tipped off Wall-Street investment traders on upcoming, not-yet-publicized, governmental health care policy changes that could affect the trading market. On the day of the alleged tip-off, share prices of major health-insurance companies increased as much as 6% in the moments before the Wall Street trading markets closed. The health-care policy changes were made public that evening. A federal judge has given the House Committee and Sutter until June 26 to respond and has ordered them to appear at a hearing on July 1. Congress argues it does not have to comply with the subpoenas based on Constitutional protections and asserts that the SEC has overreached in the matter.

Insider trading based on Congressional knowledge has been a major focus in the Obama administration. In September 2012 a Federal judge blocked an act aimed at stopping insider trading by members of Congress and other high-level federal employees. The proposed law, Stop Insider Trading on Congressional Knowledge Act, was challenged by the ACLU on the grounds that the law’s requirement that federal employees disclose all financial transactions over $1000 is unconstitutional and an invasion of their privacy. President Obama signed the bill into law in April 2012 intending to add transparency and accountability in securities trading, and to hold accountable those who abuse their privileged knowledge.