Just hours after the House passed its version of a bill intended to curb Congressional insider trading, Rep. Spencer Bachus’ office confirmed reports late Thursday that the Office of Congressional Ethics has launched an inquiry into whether the Alabama Republican violated existing insider-trading laws and House rules.
And he may not be the only Member under scrutiny.
The preliminary probe, which began late last year, focuses on suspicious trades during and after the financial crisis that Bachus reported on his annual financial disclosure forms, according to the Washington Post.
Bachus, chairman of the Financial Services Committee, maintained active trading accounts in recent years that show dozens of trades, many of which were bought and sold in short windows of time. The Post story focused on brokerage statements that detailed short-term investments in 2008 that garnered Bachus a $30,474 profit. Almost all involved the buying and selling of options, not stock in a single company.
Bachus maintained today that the information on which he based his trades did not run afoul of existing law, as he did after a “60 Minutes” episode aired Nov. 13 that focused on the trading habits of the Alabama lawmaker and other Members of Congress.
“I welcome the opportunity to set the record straight. 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,” Bachus said in a statement provided by spokesman Tim Johnson.
The Office of Congressional Ethics is an independent quasi-governmental agency charged with investigating allegations of staffer and Member misconduct and referring its findings to the House Ethics Committee.
During the fourth quarter of last year, the OCE opened four new cases and started a second-phase review in five others. If the Bachus probe began at the end of 2011 it was either opened as a single matter on Nov. 3 or one of three that commenced on Dec. 9, according to a quarterly report released by the OCE. In the past, the office launching matters involving multiple Members on the same day has meant that the Members are being investigated for related conduct, records show.
The latter date is after the “60 Minutes” report and coincides with a $22,000 legal fee paid by the Bachus for Congress Committee. In addition to monthly payments of $2,750 that the campaign had been making to Birmingham, Ala., attorney Randy Dempsey for “political consulting and office” expenses, there was a single payment of $22,000 for “additional legal services” on Dec. 8, according to the most recent report filed with the Federal Election Commission.
Dempsey’s law firm, Dempsey, Steed, Stewart, Ritchey & Gaché, was formed as Bachus & Crowson in 1974 and was where Bachus practiced law until he entered government service. Dempsey specializes in “administrative law, civil litigation and criminal law,” according to the firm’s website.
Though neither the OCE nor the Ethics Committee comment on ongoing matters, any case that is referred from the office to the committee for further action triggers a timeline after which the contents of the office’s report must be released. The committee has 45 days after receiving the case to either convene an investigative subcommittee to examine the matter or release the OCE’s findings. That window can be extended for an additional 45 days.
Financial Services ranking member Barney Frank (D-Mass.) today declined to comment on the specifics of the Bachus probe but voiced support for his fellow committee member.
“In my dealings over the years with Spencer Bachus, with whom I disagree on a number of policy issues, I have found him to be honorable and straightforward,” Frank said in a statement.
On January 3, Sen. Kirsten Gillibrand, D-N.Y., raises her right hand as her son Henry messes up her hair while Vice President Joseph R. Biden Jr., delivers the ceremonial swearing-in in the Old Senate Chamber. Gillibrand's other son Theodore, lower right, looks on.
Each year since 1990, CQ Roll Call has reviewed the financial disclosures of all 541 senators, representatives and delegates to determine the 50 richest members of Congress. This year's report, derived from forms covering the calendar year 2012, shows it took a net worth of $6.67 million to crack the exclusive club.