From the Sullivan and Cromwell overview:
A recent SEC court filing confirmed the existence of enforcement investigations into a potential violation of the Stop Trading on Congressional Knowledge (STOCK) Act. In a subpoena enforcement action filed against the House Ways and Means Committee and the staff director of its Health Subcommittee, the SEC revealed details of criminal and civil insider trading investigations arising from a potential leak of reimbursement rates announced by the U.S. Centers for Medicare and Medicaid Services (CMS) after the close of the stock market on April 1, 2013. News of the rates, which were more favorable than expected, lifted certain healthcare stocks.
The SEC, the FBI, and the Inspector General of the U.S. Department of Health and Human Services are investigating whether government sources made unauthorized advance disclosure of the rates to a lobbyist, who passed the information on to a broker-dealer and to various market participants.
The SEC filing reveals not only enforcement interest in a matter that received substantial press attention last year, but also that the authorities are bringing to bear some of the same techniques employed in traditional insider trading cases. In addition, the Ways and Means Committee’s objection to complying with an SEC subpoena based on the Speech or Debate Clause reflects the difficulty that enforcement authorities may face in proving insider trading cases involving government-sourced information.The full Sullivan and Cromwell note is here.
As I have written many times, I do not consider most insider trading unethical and it shouldn't be a crime (SEE: Judge Needs a Lesson in Finance and Economics), however, I have no problem with various parts of government harassing one another. In fact, I consider it entertaining, with the bonus being that it means they have less time to harass the private sector.
(ht .Felix Bronstein)