Skip to main content


WASHINGTON—Prosecutors are gathering evidence for a grand-jury probe into whether congressional staff helped tip Wall Street traders to a change in health-care policy, an indication the long-running investigation has entered a more serious phase.

Public documents show federal law-enforcement officials and the Securities and Exchange Commission are seeking records and other evidence from the HouseWays and Means Committee and a top congressional health-care aide, Brian Sutter, staff director of the Ways and Means Committee’s health-care subpanel.

The SEC sent subpoenas to the House committee and Mr. Sutter seeking documents and testimony in the matter, according to documents made public by Rep. David Camp (R., Mich.), who is the committee chairman, and Mr. Sutter.

Sutter was also subpoenaed to testify before a Grand Jury in the Southern District of New York, according to documents just made public in the Congressional Record.  It's not clear whether he did testify or if he is waiting to do so. It's also unknown whether Sutter, Camp or other officials on the House Ways and Means Committee are targets or merely potential witnesses for the investigation, which appears to be focused on the way information about changes in the health care law travelled between Capitol Hill and Wall Street.

Camp appointed Sutter, who has worked for Camp since 2002, to the position of staff director.

The subpoenas are related to criminal and civil investigations examining whether anyone in the government illegally passed along nonpublic information about the health policy that ended up in the hands of traders, according to people briefed on the matter. The probe was sparked by a 2013 Wall Street Journal report that detailed how health-insurance stocks jumped moments before the government announced news favorable to those companies relating to Medicare payments.
The investigation stems from the discovery that a gentleman named Mark Hayes, a former aide to Senator Charles Grassley [R-IA] prior to his employment as a lobbyist for Humana, reportedly provided confidential information about pending changes in health care legislation to a Washington securities research firm, Height Securities, information which he purportedly contended came from multiple "very credible sources," including conversations with an unnamed Senate aide (possibly another Grassley staffer). The Wall Street Journal reported last year that the jump in certain health care stock prices (described above) occurred as a result of an email sent by Height Securities predicting changes in Medicare payments, specifically Medicare Advantage Plan payments, prior to their official announcement.

According to Law 360,  the email from Hayes was reportedly sent approximately one hour and fifteen minutes prior to the announcement of by CMS. Height's report was then sent out about 45 minutes prior to the announcement, prompting several large Hedge funds to place trades on health insurer stocks that profited when the information was actually made public.

Until recently the probe had been focused on Senate  (Grassley) Health Care staffers, and according to the Journal article, this signals a new, more serious phase of the investigation is taking shape. The Center for Medicare and Medicaid Services (CMS) had previously conducted its own investigation which was then referred to the Department of Health and Human Services. DHHS had no comment to today's story.

Members of Congress and their staff have a legal duty not to share non-public knowledge about pending legislation with Wall Street, under the 2012 law governing Congressional stock trading. The SEC has yet to bring a prosecution under the law, but it looks like this could be the first.

According to the Journal, it is "highly unusual" for DOJ to issue subpoenas to congressional members or aides, primarily because of the sensitivities and legal implications regarding the separation of powers between the executive and legislative branches of government. These subpoenas against lawmakers about possible insider trading case are the first formal requests in nearly 10 years.

Your Email has been sent.
You must add at least one tag to this diary before publishing it.

Add keywords that describe this diary. Separate multiple keywords with commas.
Tagging tips - Search For Tags - Browse For Tags


More Tagging tips:

A tag is a way to search for this diary. If someone is searching for "Barack Obama," is this a diary they'd be trying to find?

Use a person's full name, without any title. Senator Obama may become President Obama, and Michelle Obama might run for office.

If your diary covers an election or elected official, use election tags, which are generally the state abbreviation followed by the office. CA-01 is the first district House seat. CA-Sen covers both senate races. NY-GOV covers the New York governor's race.

Tags do not compound: that is, "education reform" is a completely different tag from "education". A tag like "reform" alone is probably not meaningful.

Consider if one or more of these tags fits your diary: Civil Rights, Community, Congress, Culture, Economy, Education, Elections, Energy, Environment, Health Care, International, Labor, Law, Media, Meta, National Security, Science, Transportation, or White House. If your diary is specific to a state, consider adding the state (California, Texas, etc). Keep in mind, though, that there are many wonderful and important diaries that don't fit in any of these tags. Don't worry if yours doesn't.

You can add a private note to this diary when hotlisting it:
Are you sure you want to remove this diary from your hotlist?
Are you sure you want to remove your recommendation? You can only recommend a diary once, so you will not be able to re-recommend it afterwards.
Rescue this diary, and add a note:
Are you sure you want to remove this diary from Rescue?
Choose where to republish this diary. The diary will be added to the queue for that group. Publish it from the queue to make it appear.

You must be a member of a group to use this feature.

Add a quick update to your diary without changing the diary itself:
Are you sure you want to remove this diary?
(The diary will be removed from the site and returned to your drafts for further editing.)
(The diary will be removed.)
Are you sure you want to save these changes to the published diary?

Comment Preferences

Subscribe or Donate to support Daily Kos.

Click here for the mobile view of the site