According to a key advocate, Senate Judiciary Committee Chairman Charles Grassley (R-IA) is preparing to renew his push for legislation aimed at expanding disclosure of political intelligence gathering. Speaking with BNA, Craig Holman of Public Citizen said yesterday (subscription required) that bipartisan legislation will soon be introduced in both the House and Senate that would require political intelligence consultants to register and disclose their activities on behalf of their clients.
Broadly defined, political intelligence gathering includes efforts to obtain political information to assist in devising investment strategies. Although far from a new phenomenon, the link between political intelligence and finance rose to prominence following a series of academic and media reports culminating with a 60 Minutes exposé of alleged insider trading by members of Congress in November 2011. Chairman Grassley has vocally supported lobbyist-style disclosure of political intelligence gathering since soon after that piece aired.
Most notably, during Congressional deliberations regarding the Stop Trading on Congressional Knowledge (STOCK) Act, Sen. Grassley and Rep. Louise Slaughter (D-NY) successfully pushed for the inclusion of disclosure provisions in the original bill approved over a filibuster by the Senate. As we discussed in our assessment of the Senate bill, the broad registration and reporting requirements included in this initial proposal could have significant effects in both the financial services sector and beyond. The provision ultimately was removed during conference negotiations and replaced with language requiring the Government Accountability Office (GAO) to study a variety of issues related to regulation of political intelligence gathering. Read Covington’s client alert on the final STOCK Act’s political intelligence and insider trading provisions here.
GOA released its final report in April 2013. While emphasizing the inherent difficulty in assessing the extent to which political intelligence influences investment decisions, the report made no recommendations for further legislative action. Read our assessment of the GAO report here.
Nonetheless, Rep. Slaughter introduced stand-alone legislation late last Congress that would have revived the discarded STOCK Act language. The Political Intelligence Transparency Act would have required individuals and firms engaged in political intelligence activities to register under the Lobbying Disclosure Act. Registrable activities would include contacts on behalf of a client with any covered executive branch or Congressional official to derive information for use in analyzing financial markets or informing investment decisions. Such information could include details regarding proposed legislation and administrative action, as well as the nomination or confirmation of prospective executive branch officials.
With Grassley now Chairman of the committee of jurisdiction, he is in a position to advance reintroduced disclosure legislation to the floor quickly. While the details of any future Grassley-Slaughter proposal remain uncertain, any new legislation likely will hew closely to the bill introduced last Congress. In the near-term, political intelligence consultants should begin to consider the implications of any proposed disclosure regime — and associated compliance requirements — on their work.