U.S. Rep. Brian Baird has gone public over private relationships hedge funds have had with Capitol Hill lobbyists, and now the Washington state Democrat is pushing to end the practice, one that he says amounts to insider trading. According to The Hill, for some time lobbyists have been building a cottage industry out of passing “political intelligence” onto hedge fund clients, which in turn use the information to make investment decisions. While members of Congress and their staffs are barred from disclosing that type of helpful tip, restrictions on getting it from other sources are fuzzy. Baird is considering introducing a bill to slow the flow of such info, reports The Hill, a task that may be easier said than done. The congressman has suggested something of an honor system, whereby lobbyists would promise not to share information with hedge funds, or at least require full disclosure of lobby relationships with hedge funds. Would it work? Some doubt it. Capitol Hill is “so gossip driven,” Joan Claybrook, president of Public Citizen, told The Hill, “It would be hard to define what is unique information.”
