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Wall Street is coming under scrutiny from lawmakers who want to know more about financial companies’ reliance on “political intelligence” groups that operate in the shadows in Washington and deal in non-public information.
Goldman Sachs, Elliott Management, JPMorgan Chase and dozens of other financial companies that are members of the Securities Industry and Financial Markets Association, the top Wall Street trade association, are being told to disclose how much money they have spent employing political intelligence groups since 2007.
Chuck Grassley, the Republican senator from Iowa, and Mark Udall, a Democrat from Colorado, also want Sifma to provide them with a list of all members that retained political intelligence groups, and the names of those businesses.
In a letter to Timothy Ryan, Sifma president, the lawmakers explained their objections to the concept of “political intelligence” by singling out the services offered by Open Source Intelligence Group. On its website, the group offers to provide unique “monitoring” of information to clients through its “personal relationships” with lawmakers, staffers and lobbyists. Open Source says its service is ideal for companies seeking a competitive edge but who want their interests to remain safe from public view.
“Leveraging ‘personal relationships’ for ‘confidential’ clients damages public trust in the political process and raises questions about the relationships political intelligence agents attempt to cultivate in Congress,” the senators’ letter said.
Political intelligence agents are distinct from lobbyists, who seek to influence lawmakers on behalf of special interests, because none of their activity is regulated nor disclosed.
Some experts said the definition of what constitutes “political intelligence” is broad: it can encompass anything from informing hedge funds about legislative developments, to the instigation of a government investigation into a company by short sellers of the company’s stock.
The Senate passed legislation, sponsored by Mr Grassley, in February that would have forced political intelligence agents to register and disclose their activity. But the legislation did not win approval in the House.
Mr Grassley said he would revisit the provision, however, and the senator’s decision to press Sifma will sound an alarm among critics of the proposal.
In the letter, the lawmakers suggested that Sifma’s opposition to the Grassley proposal was connected to its failure to get support in the House. It included a mention of a memo, issued just a day after Mr Grassley’s amendment passed in the Senate, in which the proposal was criticised for being “expansive” and “potentially extremely broad”.
Sifma declined to comment.
“Political intelligence firms use information normal taxpayers and investors do not have to benefit their clients on Wall Street,” Mr Udall said. “When it comes to betting on government policy, Wall Street should not be able to secretly buy insider information.”
Mr Grassley added: “We’re inviting the financial services industry to explain its position on registration. Our country is stronger when information is public.”