WASHINGTON — Federal prosecutors and financial regulators have subpoenaed Congress in an investigation that could test the limits of federal insider trading laws.
The investigation focuses on a Washington research company, Height Securities. Last year, it correctly predicted a change in government health care policy, prompting a surge in the stock prices of health insurance companies.
The Securities and Exchange Commission and Justice Department have been investigating the matter since the Wall Street Journal first reported on it last year. Authorities want to know if someone in the government improperly revealed the forthcoming policy change.
Even if that happened, though, it is not clear whether a crime was committed, officials said. Insider trading laws were written to prevent people from trading on information that is not available to the public, such as one company's plan to merge with another.
In government, however, politicians and staff members regularly share information with outsiders. Lobbyists who learn of a coming policy change will, depending on their views, take credit for it or scramble to kill it. Outside experts will look for potential flaws. Political surrogates will get their talking points ready for the television cameras.
The issue for investigators is that if all of that is legal, is it illegal to buy a stock based on the information?
SEC investigators have subpoenaed Representative David Camp, the Michigan Republican who chairs the House Ways and Means Committee, for records. The Justice Department has also subpoenaed one of Camp's committee aides, Brian Sutter, to testify before a federal grand jury.