A Note from US Policy Metrics

At US Policy Metrics, we own no buildings, no machinery and no land. The chief asset we possess is our reputation. Our senior partners collectively spent over half a century serving in the highest levels of American government, and we learned from experience the legal and ethical requirements necessary for government to function effectively and responsibly.

Members of Congress, their staffs, and other government officials have never been exempt from federal securities laws. In designing our business model and strategy, we prohibited the use of “material, non-public information”, and we worked to assure that government officials with whom we interact always protect nonpublic information. We vigilantly protect our reputation and the reputation of our clients. In all cases, we comply with the letter and the spirit of the law.

We don’t chase rumors, and we don’t try to get ahead of policy announcements. We never ask government decision makers for the outcome of an imminent policy, regulatory, or enforcement decision. Our job involves economic and political analysis based on our collective knowledge of the issues, the actors, and the rules and protocols that determine how decisions are made. We develop our analysis by applying the lessons of our experience solely to information that is available to the general public.

We have a written policy on insider trading prevention that is signed by every member of the firm and periodically updated and reviewed by outside counsel. All of our contractual arrangements with our clients include a specific prohibition against the use of material, nonpublic information and our clients’ disavowal of any interest in receiving such information.

The original authors of the Stop Trading on Congressional Knowledge (STOCK) Act called it a “groundbreaking reform” that would make “an abhorrent practice illegal.” In fact, while the STOCK Act contained some meaningful reforms, the provisions at its heart simply restated what had long been true: Government officials are prohibited from using public office for private gain or benefit, and they are required to protect nonpublic information they become privy to in the performance of their duties.^[1]

The STOCK Act will certainly have an influence on the behavior of some government officials and investors – and some of our competitors – who were either less clear about the requirements of the law prior to the STOCK Act or less vigilant in complying with it. If anything, this dynamic will enhance US Policy Metrics’ edge over the competition and increase the relative value of our research products and expertise.

 

[1] STOCK Act, section 4(b)(1): “PURPOSE- The purpose of the amendment made by this subsection is to affirm a duty arising from a relationship of trust and confidence owed by each Member of Congress and each employee of Congress.”  Also CFR § 2635.703 dated August 7, 1992: “An employee shall not engage in a financial transaction using nonpublic information, nor allow the improper use of nonpublic information to further his own private interest or that of another, whether through advice or recommendation, or by knowing unauthorized disclosure.”