October 7, 2014

House Aide Tied to Insider-Trading Probe Creates Legal Fund

A top committee aide to House Ways and Means Chairman Dave Camp has established a special trust fund to solicit donations for his legal defense against an insider-trading investigation by the Securities and Exchange Commission and the Justice Department.

The creation of the legal-expense trust fund on behalf of Brian Sutter, staff director of the committee's Health subpanel, is the latest development in a matter that has for months left Congress itself fighting subpoenas from federal regulators and investigators.

A main argument of congressional lawyers in this standoff has been that the Speech or Debate Clause of the Constitution protects against such an outside inquiry into legislative business in most cases. But the fight also has become as much about the limits of a much-ballyhooed law passed in 2012 that was billed as clarifying that even members of Congress and their staff are subject to insider-trading prohibitions under securities laws.

News that federal regulators and prosecutors were seeking testimony and documents from Sutter and the Ways and Means Committee became public in early May. That's when Sutter formally notified Congress he was in receipt of subpoenas from the SEC and Justice Department, and Camp reported the committee had also received a subpoena for documents.

In court documents and in communications with the House General Counsel's office, federal officials later confirmed that the focus of the inquiry relates to a spike in stock trading of certain health care companies based on a prediction of a government health care policy by a research company, Height Securities. The questions have centered on role what, if any, Sutter's advance knowledge may have played in that company getting information on which to make its prediction.

Neither Sutter, who remains in his job with the Ways and Means Committee, nor his lawyer Christopher Guest of Washington, returned telephone calls Monday for comment about Sutter's new legal-expense trust.

But papers filed in the House clerk's office show the trust was created last Tuesday "to provide a proper means for the acceptance of money, property and services."

Donations collected, according to the document, are to be used by Sutter's trust toward legal fees "in connection with his official duties and position as a staffer in the United States House of Representatives, in connection with any action taken against Mr. Sutter by the Securities and Exchange Commission or the United States Department of Justice."

Such a trust cannot accept more than $5,000 in any calendar year from any individual or corporation, or from any registered lobbyist. Whether lawmakers and fellow congressional staffers might be among those who could give to the trust could not be determined Monday.

Specifically, the matter under which Sutter has come under federal scrutiny involved stock trading just before an April 1, 2013, Medicare Advantage reimbursement rate announcement for 2014 by the Centers for Medicare and Medicaid Services.

In a letter dated May 8 of this year, an SEC official explains the inquiry is focused, at least in part, on Sutter's knowledge of the rate announcement beforehand, his relationship and communication with a lobbyist at Greenberg Traurig, and whether that lobbyist may have then sent an email to an employee of Heights Securities approximately one hour prior to the rate announcement, causing a spike in stock trading.

According to that letter, Sutter may have modified his initial recollection of his discussions with the lobbyist after initially talking to FBI and Health and Human Service Office of Inspector General officials in early 2013.

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