A Wall Street Journal article says that a report published today by the Government Accountability Officeurges” the creation of a new disclosure regime for political intelligence firms.  That’s not how we read the report.

As background, when the Senate passed the Stop Trading on Congressional Knowledge Act (the “STOCK Act”) 96-3 last year, the bill imposed registration and reporting requirements on companies engaged in so-called “political intelligence” activities, communications with government officials if the information derived from the communication “is intended for use in analyzing securities or commodities markets, or in informing investment decisions.”  That provision was ultimately scrapped in conference committee in favor of asking GAO to write a report evaluating, among other things, the benefits and legal and practical issues raised by the imposition of disclosure requirements.

Although today’s GAO report makes no recommendations, it does highlight serious concerns expressed by experts it consulted with respect to the government’s establishing a political intelligence reporting regime.  GAO emphasized, for example, that the three individuals it interviewed “with broad public policy expertise” all suggested that a new disclosure regime would be a solution in search of a problem.  These individuals, the report highlighted, “questioned whether requiring disclosure would be a matter of promoting transparency without a compelling public purpose.”  The information disclosed would most likely already be public because existing laws make it unlawful to trade on material nonpublic political information, they argued.  Relatedly, GAO itself noted that “it is uncertain how helpful disclosure would be to an investor given the pace of market movements.”  The GAO also listed a host of other concerns: the potential compliance costs on filers, serious definitional ambiguities, First Amendment issues, and the chilling effect the law might have on slowing communications between government, media, and political intelligence firms.  Given its articulation of these problems, the report falls far short of urging implementation of political intelligence disclosure requirements.

Where does the law go from here?  The report’s skeptical tone has not stopped Congressional supporters of political intelligence disclosure requirements from characterizing it as demonstrating “the dire need for transparency” in the political intelligence industry.  Reports that bits of political intelligence earlier this week “sparked a frenzy of trading” in large health-care industry companies also lend momentum to proponents of new disclosure requirements.  Moreover, two recent developments will likely force Congress to take a new look at other pieces of the STOCK Act.  First, last week a federal court concluded that challengers to the STOCK Act’s requirement that government employee financial disclosures be posted online had stated “a plausible right to privacy claim.”  Second, as we previously reported, another Congressionally commissioned report last week recommended that these STOCK Act online reporting requirements be shelved.  All this suggests that Congress is poised to re-evaluate the STOCK Act as a whole and consider, once again, political intelligence reporting provisions.

[UPDATE: The WSJ has updated the above-referenced headline and article to remove the claim that the GAO report urges Congress to adopt political intelligence disclosure rules. The updated article also notes that Senator Grassley and the Centers for Medicare and Medicaid Services have each launched probes into the leak of political intelligence that prompted heavy trading in large health-care industry companies earlier this week.]