Back in the fall of 2011, a new book alleged insider trading by members of Congress, including the now-chairman of the House Financial Services Committee, Alabama Republican Spencer Bachus. A subsequent report aired on "60 Minutes," drawing more attention to claims that as the committee's ranking GOP member he received a closed-door 2008 briefing from Treasury Secretary Henry Paulson on the dire state of the U.S. economy that prompted Bachus to bet against the stock market.
Although Bachus strongly disputed the book's accusations, he wasn't taking any chances. He quickly called Michael D. Bopp, a Gibson, Dunn & Crutcher LLP partner who had handled many cases before congressional ethics panels. A former Capitol Hill staffer, Bopp is co-chair of his firm's public policy practice group and chair of its congressional investigations subgroup.
It soon leaked that the Office of Congressional Ethics had launched an investigation into Bachus' trades and the inquiry became an issue in a primary challenge this year. The publicity also fueled enactment of legislation aimed at curbing insider trading by members of Congress.
While Bachus dealt with the political ramifications of the inquiry, Bopp handled the actual investigation. In late April, the investigation ended, with Bopp winning a resounding victory for his client -- a finding that there was "no evidence" to support the insider-trading allegation.
The assignment was a bit of a twist for Bopp, who more often deals with probes of companies and their executives rather than of legislators. But the financial crisis and its fallout have thrown a lot of work Bopp's way. He helped navigate the crisis and deal with the raft of new regulations created by the Dodd-Frank Act. He was instrumental in creating the Coalition for Derivatives End-Users, a trade group seeking to shield businesses that need derivatives to hedge business risks from new restrictions.
Bopp also has specialized on homeland security issues and as a congressional aide helped draft the law creating the Department of Homeland Security. From 2003 to 2006, he was staff director and chief counsel of the Committee on Homeland Security and Governmental Affairs. During that time he helped draft laws reforming the intelligence community, strengthening port security and overhauling the Federal Emergency Management Agency. He also led an investigation of the response to Hurricane Katrina.
According to Peter Schweizer's account in his book "Throw Them All Out," Bachus made more than 40 trades in his personal account in the summer and fall of 2008, when the financial panic was unfolding. One allegedly came a day after Federal Reserve Chairman Ben Bernanke and Paulson provided a private briefing explaining how severe the financial panic would be. In this particular trade, Bachus bought options on an exchange-traded fund that would rise if the Nasdaq declined. When the market crashed soon after, he roughly doubled his investment.
Bopp says the whole incident left him with mixed feelings. Although Bachus was exonerated, Bopp questions whether he should have faced a probe at all. Bopp argues there was little evidence the briefing motivated Bachus' share sales. After all, it wasn't a secret in 2008 that the economy was in trouble.
"The case should never have been brought," says Bopp. He suggests that the Office of Congressional Ethics reacted as much to the book's high profile as to any facts it had presented.
Although Bachus was cleared, publicity from the book did help pass the Stop Trading on Congressional Knowledge Act, or Stock Act. Bopp says the exoneration of Bachus should be a lesson to Congress: "It should motivate them to revisit the Stock Act and not to legislate based on trash written in a book that implicates a member of Congress," he says.
Working in a probe of legislators is "fascinating work," he says. "It's really a unique mix of an SEC investigation and mitigation and policy work," he says. There can also be intangible rewards: "When somebody is unjustly accused and I can help clear their name, it is very gratifying," he says.