Rep. Spencer Bachus, chairman of the powerful House Financial Services Committee, is facing an investigation into possible violations of insider-trading laws, the Washington Post reported.
The Office of Congressional Ethics opened a probe of the Alabama Republican last year based on what the Post described as “numerous suspicious trades” from Bachus’ financial disclosure forms. Bachus, the Post reported, made numerous trades, some coinciding with major policy announcements by the federal government and industries that his committee oversees.
At issue is whether Bachus violated Securities and Exchange Commission laws barring individuals from making such decisions based on information that is not available to the general public.
The Post reported that investigators informed Bachus that he was the subject of the investigation and that they found probable cause for claims of insider trading.
“I welcome the opportunity to set the record straight,” Bachus said in a statement released by his office Friday morning. “I respect the congressional ethics process. I have fully abided by the rules governing members of Congress and look forward to the full exoneration this process will provide.”
The issues involved were featured last November in a “60 Minutes” piece on whether federal lawmakers were using sensitive information to make trading decisions. The report, following up on similar claims from a book by Peter Schweizer, said that within days of a September 2008 briefing with the Treasury secretary and Federal Reserve chairman about the looming financial crisis, Bachus bought option funds that would increase in value if the stock market collapsed, as it ultimately did.
Bachus declined to comment then, but his office told the CBS program that he never traded based on non-public information.
The Office of Congressional Ethics is an independent entity, separate from the House Ethics Committee that is comprised of members of Congress from each party. It does not have subpoena power.
News of the probe came on the very day that the House, by a vote of 417-2, passed ethics legislation that bans lawmakers from using inside information for personal gain. The legislation was inspired by reports like the “60 Minutes” segment, which also looked into the business dealings of House Minority Leader Nancy Pelosi (D-San Francisco).