Politico has reported that, in a move to break deadlock over the STOCK Act, Senate Democratic and GOP leaders are considering taking up the House version of the bill aimed at preventing politicians from profiting off nonpublic information they learn in the course of their duties. It's one option reportedly under consideration. Senate Majority Leader Harry Reid and Minority Leader Mitch McConnell will make the final decision to use the House bill or move the two passed bills to conference committee.

If you'll recall, the House and Senate versions differed in two keys areas: federal anticorruption prosecution and regulation of the political intelligence industry. The differences were so great I wondered if the STOCK Act had become a shadow of its former self,  and if the amendments to the act helped or hurt its overall cause.

The original House version of the bill, introduced by Reps. Tim Walz and Louise Slaughter, included the political intelligence regulation; the Senate version, introduced by Sen. Scott Brown, did not.

Ironically, when it was brought to the Senate for a vote (a mere three months after it had been introduced), Sen. Chuck Grassley introduced an amendment to regulate the industry. It passed the Senate. When the bill was brought to the House (six years after being introduced), the provision had been stripped.

Political intelligence involves making money off insider information about what the government is going to do. If you know, for instance, that credit card companies are about to be hit with swipe fee limits or financial companies are about to get a bailout, how and when you use that information can be lucrative.

In favor of a level playing field
 There have been mixed reports about how the political intelligence industry feels about such regulation. According to Walz, industry giant JNK Securities called his office, offering its support of the bill. "I think the industry realizes it's on the frontier," Walz said of the call. "They're trying to get a leg up on the market. And they're doing it in a way which, right now, is legal."

Walz also said that the regulation levels the playing field among the industry, as well as with investors:

It just makes the market have that sense of transparency and fairness. That's what we're trying to get at, that we're all playing by the same rules. Some of these firms are going to be better at it than others. And that's why you're going to go to them and that's fine. That's what we want, if they're giving better advice.

JNK Securities didn't return my request for comment, but it posted a release on its website which included this statement from JNK President Bill Williams:

We wholeheartedly support the effort to increase transparency into the process of gathering policy intelligence and believe that we create exceptional value for both Members of Congress as well as our clients by bringing the two together to decode the intricacies of the legislative process and debate the key legislative issues of the day.

Congress serves us (and hedge funds, too)
 Jellyfish Intelligence was formed by former Blackwater team members as a division of the OSINT Group. President Michael Bagley responded to a request for an interview with some of his thoughts.

"Members of Congress are not corporate insiders serving, among others, their shareholders. Members of Congress are serving all of us," Bagley wrote via email. "And while they may be restricted from trading themselves, that doesn't make the inside information any less valuable to other people."

In anticipation of possible regulation via the STOCK Act, Bagley says the OSINT Group is changing its definition of political intelligence.

In a 2009 interview with Hedge Fund Monthly, Bagley defined political intelligence as "policy or legislative information that is potentially market-moving, is non-public or not easily accessible to the public, and is gathered and shared with interested parties by firms with access to such information."

Now, OSINT and Jellyfish will define political intelligence as "Helping clients with their economic development objectives where it requires our 'political intelligence' to navigate the 'political challenges' of working within the nexus of the Department of Defense and the Department of State to create successful public-private partnerships here in the U.S. and internationally."

Just the beginning?
 Fool Rich Smith has been writing about the STOCK Act since 2010, and we've recently published a series detailing it from soup to nuts. And it looks as though we may be near the end of the journey. A bill, in some form, could be signed into law this year. But whether or not the political intelligence industry is regulated (and we strongly encourage it be), the journey to eliminate trading on governmental nonpublic information is far from over.

As Bagley points out, while the STOCK Act regulates trading on nonpublic information obtained from Congress, Congress isn't the only place in the government where such information can be found.