Democrats want ethics committee to probe 'day trading' allegations
01/19/2006 @ 11:57 am
Filed by John Byrne

After a comment by Rep. Louise Slaughter (D-NY) on Air America's Majority Report Wednesday evening, RAW STORY has learned that House Democrats are pushing the ethics committee to investigate allegations of congressional offices providing privleged information to Wall Street investors.
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On Air America, Slaughter alleged that "day traders" in the offices of Senate Majority Leader Bill Frist (R-TN) and former House Majority Leader Tom DeLay (R-TX) had aided such investors. She mentioned as a specific example that individuals got advance notice that an asbestos bill was not going to emerge from the Senate (Audio here).

An article that ran below the radar in November revealed the "day trading" practice, in which little-known firms use sources in Congress to glean information relevant to publicly-traded stocks. As Washington turns its eyes to fallen conservative superlobbyist Jack Abramoff, new focus has come to other allegations of congressional wrongdoing.

Independently, RAW STORY has received word that such activity -- which involves passing on information to stock brokers on how the House is going to vote on legislation that affects large companies, such as Defense Appropriations bills -- is a practice that may go beyond a single individual or congressmember's office. Individuals on Capitol Hill have pointed to others already ensnared in the Abramoff probe as possibly having engaged in "day trading."

RAW STORY has acquired a letter sent by Rep. Brian Baird (D-WA) in November of last year to the House Ethics Committee requesting a formal investigation into the matter. Meghan O'Shaughnessy, Baird's press secretary, confirmed that the committee had received the letter but has not responded to the Democrats' request.

The committee remains in flux after an internecine battle between the parties on how it would operate, and is not believed to have met this year.

In his letter, Baird writes, "I am very concerned that privileging a handful of investors with confidential information undermines investor confidence in the fairness and integrity of the securities market."

O'Shaughnessy confirmed that Baird is still aggressively pursuing the allegations. The congressman is currently drafting legislation to ban the practice, and has not ruled out bringing the allegations to the Justice Department or the Securities and Exchange Commission for a formal inquiry. The congressman will be on Air America's Majority Report tonight at 7:51pm ET.

"We'll definitely be looking into this to pursue legislative or perhaps investigative avenues to get it fixed," O'Shaughnessy said.

"I don't think anybody would be shocked were these allegations to be true, that folks would profit over legislation," one Democratic aide remarked.

"Everybody, to a degree, does this," Brian Hale of Patton Boggs, a Washington lobbying and legal firm, told The Hill.

The Hill included an anecdote from one of the members of a firm that specializes in "political intelligence." The Washington-based paper did not indicate whether the practice was limited to one office or one political party.

The "intelligence" collector said "only that he predicted in the phone call with his client whether the energy bill would make it to the Senate floor the next day. (He predicted correctly, he said.) Most firms contacted for this article wouldn't disclose their revenues from the work."

One firm told the Hill their business brings in "seven figures" each year. The article maintains that gaming legislation is not prohibited under insider-trading laws.

RAW STORY will continue to provide updates as they unfold. If you have information about insider trading and wish to report anonymously, please email tips@rawstory.com.