Wall Street investors hungry for advance information on upcoming federal health-care decisions repeatedly held private discussions with Obama administration officials, including a top White House adviser helping to implement the Affordable Care Act.
The private conversations show that the increasingly urgent race to acquire“political intelligence” goes beyond the communications with congressional staffers that have become the focus of heightened scrutiny in recent weeks.
White House records show that Elizabeth Fowler, then a top health-policy adviser to President Obama, met with executives from half a dozen investment firms in 2011 and 2012. Among them was Kris Jenner, a stock picker with T. Rowe Price Investment Services who managed its $6 billion Health Sciences Fund.
Separately, an officialin the agency that oversees Medicare and Medicaid spoke in December with managers of hedge funds, pension plans and mutual funds in a conference call. The official, Andrew Shin, was pressed during the 50-minute call for information about upcoming Medicare decisions but declined to discuss matters still under agency review, according to people familiar with the call.
That call and the White House meetings Fowler attended were arranged by political-intelligence firms, an expanding class of consultants in Washington that specialize in providing government information to Wall Street.
Hedge fund executives and other investors are increasingly interested in the timing and nature of health-policy decisions in Washington because they directly affect the profits and stock prices of pharmaceutical, insurance, hospital and managed-care companies. Similar interest surrounds other industry sectors, such as defense, agriculture and energy, whose fortunes are especially dependent on government decisions.
There is no evidence that the private discussions with the two administration officials about health-care decisions provided investors with confidential agency information or that the investors made trades based on what they learned.
But this sort of intelligence gathering has been drawing attention from lawmakers and federal investigators who are looking at whether some traders are gaining access to information that is not available to investors in general or the wider public.
The Securities and Exchange Commission and the Justice Department are probing a spike in health-insurance stock trading this year that occurred after a Washington brokerage issued a bulletin predicting the outcome of a decision by the Centers for Medicare and Medicaid Services (CMS) to increase funding for the Medicare Advantage program, which is administered by private insurers.
White House meetings
Fowler described her sessions with investors as innocuous, discussions of public information of the sort that would be supplied to any group that asked for it. “As a general principle, I met with anyone who requested a meeting,” said Fowler, who went to work for the Washington office of pharmaceutical giant Johnson & Johnson six months ago.
White House records show that Fowler met with hundreds of people during her two years as a health-policy adviser. A small number of those meetings were with investment professionals.
In August 2011, Fowler met with executives and analysts from several investment funds in a session attended by Kimberly Monk, a managing director of Capital Alpha Partners, a Washington group that markets its ability to provide “predictive insight for capital markets professionals.” White House records list the names of several investment professionals in attendance, including individuals affiliated with Janus Capital Group, Highland Capital and the Capital Group.
In April 2012, Fowler met for breakfast at the White House with a former colleague from the Senate Finance Committee staff, Shawn Bishop, now a senior vice president at the Marwood Group, which provides health-policy information to Wall Street.
About four weeks later, Fowler met with T. Rowe Price’s Jenner and two of his analysts in a meeting set up by a boutique Washington consulting firm, Capitol Street, that tracks health-care policy for major investors. After the meeting, the investors headed to Capitol Hill for talks with congressional health- and tax-policy staffers.
Asked about her meeting with the T. Rowe Price team, Fowler said, “The topics they raised were broad and general in nature, and the discussion never went beyond information that is otherwise publicly available.”
The head of equity at T. Rowe Price, Bill Stromberg, said in a statement that his firm had not requested any private information and that none was provided.
“It’s commonly understood and often communicated during discussions that no material, nonpublic information should be shared,” he said, noting that his firm “prohibits trading on this type of information.” Stromberg said that “the opinions of Washington officials can provide incremental input that helps our investment research process.”