- Rep. Spencer Bachus: "I welcome the opportunity to set the record straight"
- The Washington Post reported "numerous suspicious" stock trades led to the probe
- An official with the ethics office declined to confirm or deny an investigation
Rep. Spencer Bachus, chairman of the House Financial Services Committee, acknowledged Friday that he is under investigation for possible violations of insider trading laws, but insisted he will be cleared.
"I welcome the opportunity to set the record straight. I respect the congressional ethics process. I have fully abided by the rules governing members of Congress and look forward to the full exoneration this process will provide," Bachus said in a written statement provided to CNN.
According to a Washington Post report published Thursday evening, the Office of Congressional Ethics -- an independent entity that screens allegations of misconduct by members of Congress and their staff -- notified Bachus that it is reviewing his financial transactions because it believes he may have engaged in insider trading.
The Post reported that the office initiated the investigation last year after it began "focusing on numerous suspicious" stock trades on Bachus' annual financial disclosure forms.
The article cites sources it says are familiar with the probe who say the investigation centers on allegations that the Alabama Republican ran afoul of Securities Exchange Commission laws that bar individuals from engaging in financial transactions based on "material, non public" information.
An official with the ethics office declined to confirm or deny that any investigation of Bachus is taking place.
Bachus' stock trading activity, along with the financial investments of several other members of Congress, including House Democratic Leader Nancy Pelosi, was the subject of a book published last fall titled "Throw Them All Out" by Peter Schweizer.
The book was the basis for a "60 Minutes" segment on CBS in November, which raised questions about Bachus' trades after he attended a September 2008 briefing by then-Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke where the two men warned top leaders of the dire situation facing U.S. financial markets.
As the top Republican on the House Financial Services Committee Bachus was part of a small group of lawmakers negotiating the unprecedented bailout for U.S. banks requested by the Bush administration.
After the CBS report aired last fall, Bachus strongly denied he was using any inside information, and argued any decisions he made about investments were based on what he read in the newspapers. He noted that anyone paying attention to the news during the fall of 2008 was aware of the crisis that caused the market collapse.
After the media coverage raised questions about whether lawmakers were using information they receive on Capitol Hill to enrich their portfolios, Congress moved swiftly to respond to the controversy.
Legislation called the STOCK Act, for "stop trading on congressional knowledge," quickly gained traction, especially with multiple public opinion polls showing Congress' approval rating at a record low. Several rank-and-file members had pushed the bill for years, but President Barack Obama upped the pressure during his State of the Union address when he called for Congress to pass the measure.
The bill requires members and staff to disclose stock and other securities transactions they make within 30 days.
The Senate passed the bill 96-3 last week, and broadened its scope to cover many people working in the executive branch. The House of Representatives passed its own version on Thursday 417-2, but the two chambers still need to work through several controversial issues before a final version goes to the president for his signature.
Despite the move by Congress to show it is policing itself, the news that the Office of Congressional Ethics is reviewing Bachus' trades demonstrates that investigators believe current Securities and Exchange Commission laws -- and congressional ethics rules -- already apply to members of Congress.
While the ethics office can launch its own investigation of a member based on news reports, the House Ethics Committee is the authority charged with officially determining if any potential wrongdoing occurred, and recommending a penalty if a violation is found.
But Dan Schwager, the chief counsel of the Ethics Committee, declined to comment when asked if the panel is looking into the matter. "The committee does not comment on specific matters or allegations," he said.
As soon as reports surfaced about the investigation of Bachus, Democrats quickly circulated press clips and raised questions about GOP leaders' pledge to uphold a "zero tolerance" policy regarding inappropriate behavior.
House Speaker John Boehner's spokesman declined to discuss the investigation.
"We can't comment on something we have no information about," Michael Steel told CNN. "The OCE has not communicated anything to the speaker's office on the matter."