Wall Street, Washington and Gingrich

Newt Gingrich and his consulting companies helped financial-services giant Credit Suisse Group gather exclusive Washington information and analysis, showing that the Republican presidential candidate benefited from a practice that has come under fire from lawmakers.
This "political intelligence" business—while legal—also risks muddying the campaign argument by the former House speaker that he has been a Washington outsider since he left Congress in 1999.

Newt Gingrich and his consulting companies helped financial-services giant Credit Suisse gather exclusive Washington information and analysis. Brody Mullins has details on Campaign Journal.

At a June 2010 lunch, Mr. Gingrich gave Credit Suisse and its clients his take on whether Republicans would back government spending on renewable energy. That fall, Credit Suisse analysts held conference calls with a top official at Mr. Gingrich's health-care consultancy, the Center for Health Transformation, to interpret changes to health-care policy.
And on May 26, 2011, Mr. Gingrich's health-care firm organized a day of private meetings between Credit Suisse analysts and senior Republican congressional health-care policy aides. Though held a few weeks after Mr. Gingrich left to run for president, it was planned while he was running the firm.
The Credit Suisse "D.C. Day" at the K Street offices of the Center for Health Transformation featured analysis from top Senate aides. Credit Suisse stock analysts used the information gathered at these events to help make stock recommendations to the firm's investor clients.
Information in this story comes from people invited to the meetings and from Credit Suisse research reports.


R.C. Hammond, a campaign spokesman for Mr. Gingrich, defended the work by calling the Credit Suisse events a standard element of the center's business. "This is what CHT is: It's information flow and an exchange of ideas," he said. "They weren't giving them investment advice; they were giving them policy analysis." He added: "Giving an update on what's going on in Washington is information analysis at its best."
In a statement, Credit Suisse said its "research analysts regularly tap appropriate experts from a broad array of disciplines, in an effort to help investors make informed decisions."
Wall Street firms increasingly are seeking an edge by trying to figure out how pending policy changes could affect stocks. To service this desire a crop of political-intelligence firms has sprung up. Unlike lobbyists, they face no requirement to register with the government or disclose their names or clients. The firms connect investors with Washington insiders, who pass on analysis based on their experience and contacts. In some cases, firms arrange face-to-face meetings for investors with officials writing laws.

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Presidential candidate Newt Gingrich at a State Capitol rally for home ownership Thursday in Columbia, S.C.

Legislation introduced by Rep. Louise Slaughter (D., N.Y.) would require companies that sell political intelligence to disclose for the first time their activities and Wall Street clients. It has been embraced by a majority of House members, up from nine in November. House Republicans say they want to approve the bill early this year. It also would bar lawmakers and congressional aides from disclosing market-moving, nonpublic information about pending or prospective legislation if they believe the information will be used in stock trades.
In the Senate, Sen. Joe Lieberman, (I., Conn.) said he wants to hold a hearing on the political-intelligence business in the next few months.
Mr. Gingrich's Center for Health Transformation signed up dozens of health-care companies who paid as much as $200,000 a year to be members, with the goal of discussing and promoting free-market solutions to health-care issues. Member companies had access to a menu of services, including a speech by Mr. Gingrich, policy papers and regular conference calls. "Platinum" members receive twice-a-year meetings with members of Congress, key congressional aides and administration officials.

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Newt Gingrich in Columbia, S.C.

The Center for Health Transformation declined to say who its members are and it was unclear if Credit Suisse was among this group.
According to a membership contract viewed by The Wall Street Journal, Mr. Gingrich's group "will help host, twice during our annual partnership, a delegation of portfolio managers, client company executives, etc. for a visit to Washington DC." The day "can include meeting with key thought leaders in health care, elected officials or key staff from the Hill."
For Credit Suisse, there was the added benefit of taking advantage of Mr. Gingrich's insights and connections to gain an edge in its analysis of health-care stocks. It isn't known if other Wall Street firms were members of the center.
Companies join the center "because of our vast expertise on health policy issues and concepts we forged to transform health care," said Susan Meyers, a spokeswoman for the center. "We have been a very attractive place for anyone wanting to come to learn more about how to save lives and save money."

The May 26, 2011, event linked Credit Suisse executives with top Capitol Hill aides, including two Republicans from the Senate Health, Education, Labor and Pensions Committee and one from the Senate's tax-writing committee, which has jurisdiction over health-care policy. Others at the meetings included Charles Boorady, a top health-care analyst for Credit Suisse. The investment firm said Mr. Boorady wouldn't comment.
On June 1, Credit Suisse issued a report in Mr. Boorady's name predicting—based in part on information he cited from the "DC Day"—that managed-care companies such as UnitedHealth Group Inc. would likely benefit from a push by states and the federal government to reduce costs for Medicare and Medicaid patients.
Credit Suisse upgraded its outlook for UnitedHealth Group and raised its "target price" to $62 per share, up from $60 a share. The stock was then trading in the low $50s; it closed Thursday at $52.87 a share.
In September and October 2010, Credit Suisse analysts held two conference calls with Vincent Frakes, a top official at the Center for Health Transformation. The analysts asked Mr. Frakes for his take on how states would implement a piece of the health-care law that requires insurers to spend 80% to 85% of their revenue on medical care.
In the September conference call, Mr. Frakes said he didn't expect many states to change their insurance rules in a way that would hurt managed-care companies. He noted in a follow-up call in October that a move by a regulatory agency could make it more likely that states would ask for waivers from the rules, according to an Oct. 22 research report from Credit Suisse.
The research report said Credit Suisse's "top picks" were health insurers UnitedHealth Group and WellPoint Inc.
—Janet Adamy, Jon Kamp and Deborah Ball contributed to this article.