SEC sues for congressional papers in insider trading probe
NEW YORK — The Securities and Exchange Commission has filed a lawsuit in New York seeking to compel the House Ways and Means Committee and a top House health care aide to turn over documents in an insider trading probe, a development that could begin a power struggle between two branches of government.
U.S. District Judge Paul Gardephe in Manhattan on Friday ordered the committee and staffer Brian Sutter, a possible source of the leak, according to the SEC, to appear before him July 1. He said the committee must show why it should not be ordered to produce documents demanded by the SEC in May.
The SEC sought the subpoenas in an investigation testing the limits of federal insider-trading laws on whether the committee or staff members illegally passed on nonpublic information about a change in health-care policy. In seeking compliance with the subpoena demand, the SEC cited a 2012 law that requires public officials to keep confidential any nonpublic information about government matters that could move stock prices.
The regulator is investigating a spike in trading of health insurance companies, including Humana Inc., ahead of a government announcement last year that increased, rather than cut, payments to health insurers.
The SEC said that on May 19 the committee and Sutter notified the agency that they would refuse to comply with the subpoena demand because it was “repugnant to public policy.”
Kerry W. Kircher, general counsel for the House of Representatives, told The Associated Press that the SEC subpoenas “run seriously afoul of the Constitution's Speech or Debate Clause.” Kircher said House lawyers are aware the federal judge wants a response by Thursday and will respond on that ground, among others.