Senators demand info on Wall Street's use of political intelligence

By Peter Schroeder - 06/27/12 03:33 PM ET

A bipartisan pair of senators is pressing the financial services industry on how much they rely on "political intelligence" firms in their work.

Sens. Chuck Grassley (R-Iowa) and Mark Udall (D-Colo.) sent a letter to the Securities Industry and Financial Markets Association (SIFMA) Wednesday, demanding details on which of its members have retained political intelligence firms, how much has been spent on the industry and whether the group would support requiring registration for such firms.

"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 members wrote. "It is essential that we learn more about the gathering and dissemination of political intelligence."

The growing political intelligence industry, in which plugged-in informants market nonpublic congressional information to Wall Street traders, was a flashpoint between the House and Senate during this spring's consideration of the Stop Trading on Congressional Knowledge (STOCK) Act. When the Senate considered the bill barring insider trading by lawmakers, an amendment from Grassley that would require political intelligence consultants to register in a similar fashion to lobbyists was narrowly approved, despite opposition from leadership in both parties.

However, the provision was then trimmed from the measure taken up by the House by Majority Leader Eric Cantor (R-Va.), who described the measure as potentially overbroad, earning him recriminations from both Grassley and the White House. In its place was a measure requiring a study on the industry by the Government Accountability Office.

The Senate ultimately agreed to just take up the House version of the bill, leaving Grassley's amendment set aside.

Now, Grassley and Udall are pressing the financial industry for details on exactly what companies are using political intelligence firms, and how much it is costing them. The pair is asking for a response by July 25.

SIFMA declined to comment on the letter through a spokesman.