After spending a year studying political intelligence firms that gather insider political tips and sell them to investment firms, the Government Accountability Office (GAO) issued a 34-page report that named few names and contained no recommendations for how to crack down on an industry watchdog groups and others say is ripe for cronyism and insider dealing.
The “GAO study on political intelligence yields little insight” and “provided ammunition to critics of the industry,” reported the Washington Post.
The bipartisan tandem of Sen. Charles Grassley (R-IA) and Rep. Louise Slaughter (D-NY) say they plan to reintroduce legislation requiring political intelligence firms to register themselves publicly, similar to lobbyists.
“This [GAO] report shows the dire need for transparency in the political intelligence industry, which profits from the cozy relationship between Washington, D.C., and Wall Street,” said Grassley and Slaughter in a joint statement. “When a political intelligence professional is paid to gather inside information from congressional or agency sources that can be used to make investment decisions, that professional should have to register and disclose his or her activities to the public.”
Grassley and Slaughter say their call to increase transparency through public disclosure “enjoyed strong bipartisan support from both houses of Congress last session,” and “when we re-introduce this disclosure requirement, we expect it to once again have widespread support among lawmakers and the public.”
The original political intelligence public disclosure rule was included in the Stop Trading On Congressional Knowledge (STOCK) Act passed last year, but the language was stripped out of the bill before passage.
In a recent Forbes article, Government Accountability Institute (GAI) President Peter Schweizer noted that House Majority Leader Eric Cantor (R-VA) and then-Sen. Joseph Lieberman (D-CT) led the effort to strike down the language. Schweizer reports that Cantor and Lieberman’s personal connections to the financial services industry may have influenced their opposition:
What Cantor and Lieberman failed to mention were their relationships to the financial services industry. In the 2012 election cycle, Cantor raked in $896,900 from securities and investment firms. And his wife, Diana Cantor, is an investment committee member for an investment adviser that manages almost $900 million in private fund assets. During the 2010 election cycle, Sen. Lieberman bagged over $2 million in campaign donations from securities and investment firms, the most of any industry.
Despite the GAO’s toothless report, Grassley sent a letter Monday to an investment research firm, Height Securities, cited in a Wall Street Journal article by reporters Brody Mullins and Tom McGinty highlighting the company’s well-timed prediction of a government decision before it was publicly announced. Grassley said Height’s actions underscore “serious questions regarding how political intelligence brokers are able to gather information for their clients in advance of market moving events.”
Height Securities says its research was “conducted in accordance with a comprehensive regulatory regime,” and that they “look forward to demonstrating this to Senator Grassley.”
Still, watchdog groups devoted to rooting out cronyism say the GAO’s lackluster report does little to address concerns about the shadowy $100 million political intelligence industry.
“We know as much now as we did before the [GAO] report was written,” said Citizens for Responsibility and Ethics Executive Director Melanie Sloan. “The report provides no information.”