House Panel Rejects SEC Document Request for Insider Trading Investigation, According to Reuters

House Committee Resists SEC Subpoena in Insider Trading Probe

A panel of the U.S. House of Representatives announced on Friday its refusal to comply with a demand from a federal regulator for documents related to an insider trading investigation involving a subcommittee staff director and a lobbyist.

The House Ways and Means Committee filed a court document requesting that U.S. District Judge Paul Gardephe in New York dismiss the Securities and Exchange Commission’s (SEC) effort to subpoena records from the committee and Brian Sutter, the staff director of its healthcare subcommittee.

The SEC initiated legal proceedings on June 20 to enforce subpoenas as part of its investigation into whether Sutter disclosed confidential information regarding Medicare reimbursement rates to Mark Hayes, a lobbyist at a prominent law firm.

In its court filing, the committee described the SEC’s subpoena as "a remarkable fishing expedition for congressional records" and argued that the U.S. Constitution protects the committee and Sutter from being forced to testify or provide documents.

The SEC did not respond to requests for comment.

The conflict between the House committee and the SEC raises questions about the extent of the SEC’s authority to compel cooperation from the legislative branch in its enforcement of federal securities laws.

Previous filings from the SEC indicate that Hayes communicated with Sutter on the same day the Centers for Medicare and Medicaid Services released reimbursement rates for the Medicare Advantage program. Following that exchange, Hayes reportedly emailed a brokerage firm, which subsequently issued a "flash alert" suggesting the information could benefit insurance companies, leading to a significant rise in share prices for affected firms.

The SEC is expected to respond to the committee’s arguments by July 11.

This case is known as SEC v. Committee on Ways and Means of the U.S. House of Representatives et al, filed in the U.S. District Court for the Southern District of New York.