Overview
In an opinion dated Friday but released this morning, Judge Gardephe largely upheld subpoenas to a congressional committee and a staffer concerning allegedly unlawful stock trading under the STOCK Act, which essentially extended insider trading laws to Congress. (See our previous coverage of the case here.)
Judge Gardephe found that the subpoenas were not barred by the doctrine of sovereign immunity and further found that any immunity was waived by the passage of the STOCK Act:
[An] aspect of not being “exempt from the insider trading prohibitions” [as provided in the STOCK Act] is that a person is subject to (1) investigation by the SEC for suspected insider trading pursuant to Section 21(a) of the Exchange Act; and (2) the investigative tools authorized in Section 21(b) of the Exchange Act, including depositions and document requests. Respondents’ interpretation of the STOCK Act – that it makes Members of Congress and their staff subject to SEC civil enforcement actions and criminal prosecutions regarding insider trading but not to SEC investigations of insider trading – is not a tenable reading of the STOCK Act and is not consistent with its plain language.Nonetheless, Judge Gardephe ruled that the Speech and Debate Clause of the Constitution “provides a non-disclosure privilege for documents that fall within the ‘sphere of legitimate legislative activity.’” This would not include “dissemination of information outside of Congress,” but would include internal documents “to the extent that they include information concerning planned future legislative activity or relate to information-gathering relevant to such activity.”
