Then there are firms that are not brokers or traders but focus on selling research to investor clients. These firms include Cypress Advisory and the Washington Research Group, which is part of Guggenheim Securities.
Height, located a block from the White House, was founded in 2009 and provides research, investment banking and other services to institutional investors and corporations, according to financial records. The company’s Web site says it believes in a “research first” approach. The company seeks to gain an intimate knowledge of what is going on in Washington.
Height’s SEC filings show that the firm, along with an affiliated company called Height Analytics, is principally owned by managing partners Andrew Parmentier and John Akridge IV, who used to work at FBR, an Arlington County-based investment bank.
Officials at Height did not return phone calls or e-mails Thursday.
Height reported 2012 revenue of $7 million, with $1.4 million in assets and $461,000 in liabilities, records show. While the majority of its several dozen employees have banking and asset management experience, the firm has employed former CIA agents and even a former professional lacrosse player, according to company information found on the Web site LinkedIn.
Although the firm, which also has a New York office, is small, it has sought to exercise political muscle. Parmentier and Akridge have made nearly $100,000 in political contributions since 2009, spread among numerous Republicans but also the Democratic National Committee, election finance records show.
The SEC investigation centers on activities on April 1. Height alerted its clients that the government would soon make a decision favoring private health insurers who participate in a Medicare program. Coming only 18 minutes before the trading day ended, the alert sparked a surge in trading in the shares of several major health-care firms, including Humana and Aetna. Height was proved right; the government decision to increase funding for the Medicare Advantage program, run by private insurers, was announced after trading ended.
The SEC has subpoenaed a Height Securities analyst, Justin Simon; Mark Hayes, a health-care lobbyist who advised the firm on legislative issues; and Hayes’s law firm, Greenberg Traurig, people familiar with the probe have said. They spoke on the condition of anonymity because the investigation is not public.
Greenberg Traurig also employed D.C. super-lobbyist Jack Abramoff, who was convicted in a wide-ranging corruption scheme that ensnared lawmakers, Capitol Hill aides and government officials.
SEC investigators interviewed Hayes for four hours in a meeting attended by the FBI, the people said. Height has not received an SEC subpoena, they said. All the parties involved have denied wrongdoing.
Employees at publicly traded companies have long been subject to strict insider-trading laws. The Stock Act, passed by Congress in April 2012, makes explicit that these laws also apply to members of Congress, their staffs and other federal officials. It also adds that there is a “duty of confidentiality and trust” that all of these employees have with information that is not public and that is “material,” meaning it could affect the price of a security.
This law, in theory, should transform how valuable information is exchanged in Washington, a place practically built on people constantly trying to figure out what happened in the latest closed-door meeting.
Yet Mayhew said that not much has changed. “That’s already the law, and no one’s talking about it,” he said. “They’re acting as if the Stock Act never passed.”
Tom Hamburger and Alice Crites contributed to this report.
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