Nineteen months ago, with only 20 minutes remaining in the trading day, a Washington-based broker-dealer, Height Securities, blasted out a “flash report” to nearly 200 clients, including hedge funds on Wall Street that predicted a raise in Medicare reimbursement rates. This sent many health insurance companies’ stocks soaring. Regulators are now trying to investigate insider trading among congressional employees and firms that provide political intelligence leaks, but these efforts to build a case inside the beltway of Washington, D.C. are proving challenging.
1. After several embarrassing news items about members of Congress who were trading stocks based on information obtained in committee hearings, who stripped the language out of the Stock Act that would have required disclosures by political intelligence firms? Discuss the current position of that person.
2. Why is it so hard for the SEC to argue that this news was nonpublic information?
3. Do you think that the Ivan F. Boesky case from the 1980s is different from what is going on today? Explain.
Creswell, J. (2014). Tip on Medicare Spurs Insider Trading Investigation. The New York Times, Nov. 14 (Retrievable online at http://www.nytimes.com/2014/11/15/business/tip-on-medicare-spurs-insider-trading-investigation.html?hpw&rref=business&action=click&pgtype=Homepage&module=well-region®ion=bottom-well&WT.nav=bottom-well&_r=0)