Judge gives U.S. House panel more time to prep for court battle with SEC

Reuters News
Posted: Jun 23, 2014 5:09 PM

By Sarah N. Lynch

WASHINGTON (Reuters) - A U.S. judge has granted a House of Representatives panel and one of its staffers more time to prepare for a court battle over whether they must comply with a federal regulator’s subpoenas tied to an insider-trading probe.

The order made public on Monday by U.S. District Judge Paul Gardephe in Manhattan gives the House Ways and Means Committee and its healthcare subcommittee staff director Brian Sutter until July 4 to respond to the Securities and Exchange Commission's demands for records.

Gardephe also delayed to an unspecified date a court hearing on the matter, which had been previously scheduled for July 1.

The SEC on Friday asked the court to compel the committee to comply with its subpoena, which is seeking information related to a probe into whether Sutter leaked material nonpublic information about Medicare reimbursement rates to Mark Hayes, a lobbyist at Greenberg Traurig LLP.

The committee is resisting the SEC's efforts, in what many say marks a rare dispute that could test the boundary of the SEC's powers to compel the legislative branch of government to cooperate with its enforcement of the federal securities laws.

In court filings, the SEC said that Hayes spoke with Sutter the same day that the Centers for Medicare and Medicaid Services announced reimbursement rates for the Medicare Advantage program. The regulator says Hayes then emailed the brokerage firm Height Securities, which shortly afterwards sent its clients a "flash alert" suggesting the deal could help insurance companies such as Humana Inc and Health Net Inc.

Share prices of both companies jumped after the report was issued.

The House committee is opposing the SEC, saying the U.S. Constitution shields the panel and Sutter from being compelled to testify or produce documents.

A spokeswoman for Greenberg Traurig said on Friday after the SEC filed its action that the firm is cooperating with the inquiry.

The SEC will have until July 11 to respond to the committee's opposing arguments.

The case is SEC v. Committee on Ways and Means of the U.S. House of Representatives et al, U.S. District Court, Southern District of New York, No. 14-mc-00193.

(Reporting by Sarah N. Lynch; Editing by Lisa Shumaker)