Insider trading on the Hill

This story is just bubbling up from the sewers of Capitol Hill-- the word is that people in the offices of Tom DeLay, Bill Frist, (both under investigation for corruption) and possibly others have been passing on information that has allowed some investors to make a killing on the stock market. Simply put, they're passing information about legislation that's about to pass. Legislation that will benefit certain publicly-traded companies, but hasn't hit the news yet.

Day traders were confused. On Tuesday, Nov. 15, they couldn't figure out why there was so much action in USG Corp. (), a Chicago building-materials company whose subsidiary is mired in asbestos lawsuits. The stock was trading at double the normal daily volume and would gain $2.12 to close at $61.55. But there wasn't any major news to power the run-up.

Public news, that is. Behind the scenes, Senate Majority Leader Bill Frist (R-Tenn.) had decided to override the qualms of Budget Committee leaders and press ahead with a bill to create a $140 billion fund to relieve companies such as USG of their asbestos liabilities. Frist wouldn't announce his move until Nov. 16. But the news got to key Wall Street players a day early via a little-known pipeline: a small group of firms specializing in "political intelligence" that mine the capital for information and translate Washington wonkspeak into trading tips.