Constitutional Law

SEC sues to enforce congressional subpoenas in possible constitutional showdown

The U.S. Securities and Exchange Commission asked a federal court on Friday to compel compliance with subpoenas issued to a congressional committee and one of its staffers.

The SEC is seeking information from the House Ways and Means Committee and health-care aide Brian Sutter in an investigation of possible insider trading in health stocks, report the Wall Street Journal (sub. req.), Bloomberg News and Reuters.

U.S. District Judge Paul Gardephe of Manhattan directed representatives for the committee and Sutter to appear at a July 1 hearing. The SEC is basing its inquiry on a 2012 law that bars public officials from leaking material nonpublic information that could affect stock prices to traders.

The House Office of General Counsel cited the Constitution in a statement. The SEC subpoenas “run seriously afoul of the Constitution’s speech or debate clause, and we expect to respond in due course on that ground, among others,” the office said.

Court documents say the SEC is investigating whether someone leaked information about a change in Medicare reimbursement rates before the public announcement, the stories say. A Greenberg Traurig lobbyist predicted the upcoming change in an email to an investment research firm, which notified its clients. The lobbyist had received email from Sutter on another matter the same day, and the two also spoke on the phone, the SEC alleged.

A Greenberg Traurig spokesperson said the law firm is cooperating in the inquiry. Sutter did not respond to the Wall Street Journal’s request for comment.

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