WSJ: Hedge Funds Pay Top Dollar for Washington Insider Information

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Good work - if you can get it.  Washington is so huge, and the money that flows through it so enormous, insiders become "experts" and profit from it.   What some promote as "public service" is little more than a lifetime of profit from public connections and insider status.

The most revealing quotes from the article:

"I have information from doing my day job as a lobbyist," explains one lobbyist. "That information has value on Wall Street. So I sell it."

Securities laws don't, however, bar most political insiders from sharing nonpublic information about government affairs. 

"The ultimate [investing edge] is insider information, so you want to get as close to the line as possible without crossing the line" ... "That's why Washington is so interesting—because there is no line."


                                               Because there is no line.


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From today's Wall Street Journal:

WASHINGTON—At a breakfast fund-raiser last year at the Liaison Capitol Hill hotel, former lobbyist Paul Equale pulled up a chair next to Sen. Richard Durbin. As they chatted, the Illinois Democrat told him about a recent breakthrough in his efforts to push through a bill to cap debit-card fees.

In Washington, such shop talk between political insiders is so routine that it hardly warrants mention. For Mr. Equale, however, it yields intelligence that fetches good money on Wall Street.

Mr. Equale works as a consultant ... which connects Wall Street investors hungry for information with Washington insiders ... [the Hedge] funds subsequently traded in the stocks of Visa Inc. and MasterCard Inc., according to regulatory filings. It is unclear what role Mr. Equale's report played in their investment decisions.

Information about what's happening in Washington is at a premium on Wall Street these days. Government regulatory changes and economic initiatives following the 2008 financial crisis have affected numerous industries, and even minor shifts in policy can be of interest to hedge-fund managers. When the health-care bill was snaking its way through Congress in 2009, for example, hedge funds wanted to know about every twist and turn. They followed the debt-ceiling showdown over the summer just as closely.

Keen for information about what's happening behind the scenes, hedge funds have been drilling ever deeper into the government. Thousands of political insiders are being paid by hedge funds, private-equity firms and other big investors.

Former Federal Reserve Chairman Alan Greenspan, for example, is an adviser to Paulson & Co., and former Treasury Secretary John Snow works for Cerberus Capital Management. SAC Capital Advisors and Eton Park Capital Management have hired former congressional staffers....

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Link: http://online.wsj.com/article/SB10001424053111904070604576514791591319306