At least 436 Department of Health and Human Services employees–and possibly more at the White House Office of Management and Budget–received advance notice of an $8 billion Medicare decision that sent private health insurers’ stocks soaring.
The Department of Justice and the Securities Exchange Commission (SEC) have launched a probe to investigate possible insider trading.
“This should sound an alarm,” said Sen. Charles Grassley (R-IA). “It should result in better controls to avoid unfair access to information that the average investor could never tap.”
The case involves an April 1 decision by the Centers for Medicare and Medicaid Services (CMS) to expand funding to the private-sector Medicare Advantage program by $8 billion. Employees at the Department of Health and Human Services were notified in some cases as far as two weeks in advance. Whether federal workers innocently passed along the potentially market-moving information or were courted by the emerging “political intelligence” industry that sells government intel to Wall Street firms is presently unknown.
“There are plenty of people at CMS who, wanting to be cooperative and friendly, may have given out information without realizing it could benefit one investor versus another,” former Medicare director Thomas Scully told the Washington Post.
Sen. Grassley, who included a provision in the Stop Trading On Congressional Knowledge (STOCK) Act that would have required political intelligence agents to register similar to lobbyists, has vowed to crack down on the kinds of government cronyism that foster insider trading.
Grassley says potentially market-moving government information “should be available to everyone at the same time, not handled loosely in a way that allows special access to some individuals.”