Judge rules for SEC in fight with House panel over insider trading probeReprints
(Reuters) — A U.S. House of Representatives panel and a former staffer must comply with subpoenas issued by the U.S. Securities and Exchange Commission as part of an insider trading probe, a federal judge has ruled.
U.S. District Paul Gardephe in Manhattan, in a decision made public on Monday, said the House Ways and Means Committee must produce some documents to the SEC, and Brian Sutter, a former staff director for its healthcare subcommittee, must be deposed.
The decision came 16 months after the SEC first went to court over the committee's refusal to provide information as part of a probe of whether Sutter leaked material non-public information about Medicare reimbursement rates to a lobbyist.
The ruling came in one of the first publicly disclosed probes by federal authorities invoking provisions of a 2012 law called the STOCK ACT, which seeks to prevent people from using "political intelligence" to trade non-public information.
Both the SEC and federal prosecutors in Manhattan have launched investigations related to the alleged leak, according to court and congressional records.
The House committee had resisted complying with the SEC's demands for information, arguing in part that the U.S. Constitution shielded the panel and Sutter from being compelled to testify or produce documents.
Gardephe ruled that while the House was protected from producing some legislative documents, some documents could be produced, including administrative or personal communications between Sutter and the lobbyist's firm, Greenberg Traurig L.L.P.
Gardephe said the House must also produce Sutter's telephone records, with some redactions, and that the former staffer himself can be deposed.
An SEC spokeswoman declined to comment. Representatives for the House and Sutter did not immediately respond to requests for comment.
According to court filings, the SEC has been looking into an email a lobbyist at Greenberg Traurig sent to broker-dealer Height Securities regarding a deal struck in Congress about Medicare rates in 2013.
The SEC said the email was sent before the Centers for Medicare and Medicaid Services announced the rates after U.S. markets closed, and about 30 minutes before Height issued a report suggesting the change could help companies such as Humana Inc and Health Net Inc.
Sutter, on the day of the announcement, had been emailing the Greenberg Traurig lobbyist about the termination of a client from the Medicare program, and they had spoken on the phone, the SEC said.
The case is SEC v. Committee on Ways and Means of the U.S. House of Representatives et al, U.S. District Court, Southern District of New York, No. 14-mc-00193.