Citation Edit

Government Accountability Office, Political Intelligence: Financial Market Value of Government Information Hinges on Materiality and Timing (GAO-13-389) (Apr. 4, 2013) (full-text).

Overview Edit

The Stop Trading on Congressional Knowledge Act of 2012 (STOCK Act of 2012) specifically defines political intelligence as information that is "derived by a person from direct communications with an executive branch employee, a Member of Congress, or an employee of Congress; and provided in exchange for financial compensation to a client who intends, and who is known to intend, to use the information to inform investment decisions."

While no other laws or ethics rules specifically govern political intelligence activities, securities laws and executive and legislative branch ethics rules and guidance do provide guidelines for government officials to protect material nonpublic information (e.g., information that has not been disseminated to the general public or is not authorized to be made public). For example, insider trading laws apply to both the executive and legislative branches and prohibit the disclosure of material nonpublic information derived from employees' official positions for personal benefit.

The STOCK Act of 2012 directed the GAO to report to Congress on the role of political intelligence in the financial markets. The GAO reviewed (1) the legal and ethical issues, if any, that may apply to the sale of political intelligence; (2) what is known about the sale of public and nonpublic political intelligence, the extent to which investors rely on such information, and the effect the sale of political intelligence may have on the financial markets; and (3) any potential benefits and any practical or legal issues that may be raised from imposing disclosure requirements on those who engage in these activities.

The GAO made no recommendations in this Report.

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