Monday, May 13, 2013

Law Firm Insider Trading News & Allegations

In interesting update about the growth of the "political intelligence" industry and the potential for concern, as reported in recent stories via the Washington Post:

"SEC subpoenas firm, individuals in a case of leaked information" --
  • "The Securities and Exchange Commission has issued subpoenas to a firm and individuals in connection with the leak last month of a federal funding decision that appeared to cause a surge in stock trading of several major health companies. The move deepens the government’s scrutiny of the growing 'political intelligence' industry, which has been thriving on delivering valuable information from Washington to investors. This relatively new breed of companies capitalizes on the fact that decisions made in Washington — whether a regulator blocking a big merger or a lawmaker tweaking legislation — can create opportunities for stock traders to make money."
  • "The latest case emerged April 1 when Height Securities, a Washington-based stock brokerage firm, alerted its clients that the government would soon make a decision favoring private health insurers who participate in a Medicare program. The alert went out 18 minutes before the end of the trading day, sparking a surge in trading in the shares of several major health-care firms, including Humana and Aetna. The official government announcement was made after trading closed for the day."
  • "On Wednesday, several people familiar with the probe confirmed that the SEC has subpoenaed a Height Securities analyst and Mark Hayes, a health-care lobbyist who advised the firm on legislative issues. Hayes’s law firm, Greenberg Traurig, was also subpoenaed by the SEC, according to the sources, who spoke on the condition of anonymity because the matter was under federal investigation. The SEC has conducted an interview with Hayes, who voluntarily submitted to four hours of questioning, these people said. The FBI was present at the meeting, suggesting that the Justice Department has taken a deep interest in the matter, one of the people said. A Justice Department spokesman declined to comment on an ongoing investigation."
"Greenberg Traurig law firm at the center of ‘political intelligence’ case" --
  • "How the lobbyist, who works at the law firm Greenberg Traurig, stepped into this morass offers a window into what has become a routine and profitable practice at law firms and lobbying shops: In addition to their usual work, lobbyists share with financial firms the latest political tidbits they are gathering from sources, sending an e-mail here and there with the latest ‘political intelligence.’ The financial firms value the information because it can inform their investments."
  • "Greenberg Traurig was not doing anything unusual for a law firm by sharing political insight with clients who have investment interests. But when that information then informs stock trading, the ethics can become murky. ‘The road to hell in this particular situation is not paved with clarity,’ said Stephen M. Ryan, head of the government strategies practice group at the law firm McDermott Will & Emery. ‘You wander into it.’"

No comments:

Post a Comment