The global market for policy research and political intelligence was worth more than $400 million in revenue in 2009, according to Integrity Research Associates, which tracks the U.S. equity research industry. The group estimates that the political intelligence business has more than doubled in size over a decade.
But efforts to shed light on that growing industry have fallen flat. Congress abandoned a push that would have required the industry to report its activities to federal regulators, just as lobbyists must do.
In a report released last month, the Government Accountability Office said it could not quantify how much political intelligence the industry sold to clients or the nature of the compensation it received. The GAO said the information is often bundled with research and other materials, making it tough to gauge the industry’s activity or its effect on investors.
The report provided ammunition to critics of the industry, including Sen. Charles E. Grassley (R-Iowa) and Rep. Louise M. Slaughter (D-N.Y.), who said they plan to introduce legislation that would require the firms to disclose their activities and relationships to federal regulators and the public.
More recently, Grassley has waded into the fray by initiating his own investigation into the matter.
Key to Grassley’s inquiries is Hayes, the Greenberg Traurig lawyer, who was also a Humana lobbyist and a former Grassley staffer.
On April 1, Hayes wrote an e-mail to Height Securities analyst Justin Simon, suggesting that a high-level deal had been made that would provide a benefit to health insurers in exchange for an agreement by Sen. Orrin G. Hatch (R-Utah) to support an Obama nominee.
“Our intel is that a deal was already hatched” to prevent any reduction in federal reimbursement payments to private health-insurance companies, Hayes wrote.
Grassley wants to know more about the relationship between Hayes and Height.
In an April 29 letter obtained by The Washington Post, Grassley accused the firm of stonewalling his investigation by refusing to provide information or allow Hayes to fully cooperate with the inquiry. Height Securities, Grassley wrote, “is becoming a serious impediment” to the probe.
In a response to Grassley, lawyers for Height Securities rejected his complaint, saying they gave him unfettered access to Hayes for information related to the period in which the health stock trading took place, and that the firm was committed to cooperating.
In his statement to The Post, Parmentier said the analyst, Simon, had made an independent call based on multiple data points. Simon’s attorney declined to comment on his client’s subpoena.
Hayes declined to comment Wednesday.
But his law firm, Greenberg Traurig, said in a statement that it is cooperating with government inquiries related to the Height alert. It also said Height is no longer a client, and that it will not represent political intelligence firms in the future.
“We have concluded that providing government relations services to an entity in the ‘political intelligence’ area may lead to misunderstanding and unintended use of those services, even when compliant with legal and ethical standards,” the statement said.
The law firm said that it had no financial connection with Height Securities’ activities, nor did its shareholders. It also said that it was not the only source of the information.
“Height has acknowledged using a variety of sources before issuing its alert,” the law firm said. “We have found no information that any of our shareholders had access to any material confidential government information.”
Jia Lynn Yang contributed to this report.