Disclosure by “Political Intelligence” Firms would Shine Light on Investment Decisions

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On the intersection of K Street and Wall Street lies the burgeoning “political intelligence” industry, where lobbyists, advisors and other DC insiders use their campaign contributions, connections and clout not to shape legislation, but to make investment decisions. The Stop Trading on Congressional Knowledge (STOCK) Act, H.R. 1148, introduced by Representatives Walz and Slaughter would shed some light on political intelligence activities by requiring firms that specialize in gathering nonpublic information from Hill sources to register with the House and Senate, as lobbying firms are required to do. The bill also creates rules to tamp down the occurrence of insider trading by members of Congress.

It’s no wonder that savvy investors at hedge funds look to Washington insiders to help them decide to buy or sell stocks. Will a bankruptcy bill help or hurt credit card companies? Will offshore oil drilling be allowed? Will legislation to address antitrust claims be introduced? Is the pharmaceutical industry going to face new regulations? What Congress does matters very much to the business world, and early, nonpublic information about the way Congress will impact any business or industry can lead to huge profits for investors.

The political intelligence industry relies on remaining in the shadows. The website for one firm that specializes in political intelligence notes,

Our political intelligence operation differs from standard ‘lobbying’ in that the OSINT Group is not looking to influence legislation on behalf of clients, but rather provide unique ‘monitoring’ of information through our personal relationships between lawmakers, staffers, and lobbyists working the K Street – Pennsylvania Avenue corridor.

Providing this service for clients who do not want their interest in an issue publicly known is an activity that does not need to be reported under the Lobbying Disclosure Act (LDA), thus providing an additional layer of confidentiality for our clients.

If the STOCK Act passes, the “additional layer of confidentiality” will disappear, helping to ensure that insider information is not driving investment decisions for a few, leaving the rest of us in the dark.

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