WASHINGTON — When it comes to one of his signature legislative victories, Rep. Tim Walz has some unfinished business.

A little more than 15 months ago, Congress passed the STOCK Act, a bill meant to bring some transparency to the stock trading habits of members of Congress.

But in the days before final passage, lawmakers took out a provision deemed by even some of its supporters as controversial, one meant to bring transparency to so-called political intelligence firms, those that glean information about political dealings from Capitol sources and use it for their clients’ financial gain.

Good-government groups worry such firms could use non-public information to manipulate the stock market.

Walz and the STOCK Act’s other supporters, New York’s Rep. Louise Slaughter chief among them, were coolly upset that leadership pulled the provision, even though just five lawmakers across the House and Senate would end up voting against the STOCK Act as a whole. The bill mandated a largely toothless study on political intelligence firms but left it at that.

But over the past month, the Washington Post has highlighted several separate potential political-intelligence controversies, bringing pause to Walz and other lawmakers.

Last week, the Post detailed meetings with White House staffers set up by political intelligence firms during early implementation of the Affordable Care Act. The meetings were seemingly legal, and insiders told the Post no non-public information was discussed, but Walz said the very fact that such meetings took place — and that it took a semi-investigative reporter to uncover them — shows the need for renewed scrutiny.

“It’s totally expected, it’s exactly what I’ve been saying,” Walz said. “At the very least, these folks should be cleared, and it should be made absolutely public and transparent why they’re there and what they’re doing.”

What are political intelligence firms?

Market researchers have no idea how many political-intelligence firms there are, except that it’s an industry bringing in some $400 million a year, said Michael Mayhew, the director of Integrity Research Associates, which tracks the industry.

Political intelligence firms’ goal is to connect their clients to otherwise inside information, either by uncovering it themselves or setting up meetings with in-the-know officials directly, Mayhew said. That in and of itself isn’t the issue — he noted big media firms like Bloomberg and Politico offer up subscription services essentially trolling for the same information.

But it gets dicey, Mayhew said, when firms get such non-public info when they, or the sources providing them, know it’s not yet meant to be public, and that it could have a “material” impact on financial markets.

“The tipper needs to be breaking a duty of trust, and there needs to be clearly an intention to inappropriately provide that information,” Mayhew said.

In early May, the Washington Post wrote about a surge in health-care stock trading just before a government announcement about the sector. That, coupled with last week’s report on White House access, has Walz and others pushing for further reform this session.

“Sunlight is the best disinfectant,” Walz wrote in a letter to colleagues last month. “This is not the first case of the political intelligence industry shocking the marketplace and it will not be the last if Congress does not act.”

House stripped language last year

In the STOCK Act-mandated political intelligence report, the Securities and Exchange Commission said that such reform could help identify potential insider trading in the long-run. “Disclosure of more information could allow enforcement staff to identify relationships or make connections between the various individuals involved in an investigation of potential insider trading,” the SEC said.

That, essentially, is what the STOCK Act was trying to do last year.

A few days before Senate passage, lawmakers attached a provision to require political intelligence firms to register publicly, as lobbyists do. The amendment passed with 60 votes, but a bipartisan group of lawmakers were wary about it (tellingly, the STOCK Act as a whole passed the Senate with 96 votes).

When the bill went back to the House, leadership stripped the provision before bringing the bill to the floor, raising concerns that the language was overly broad and could ensnare entities that aren’t political intelligence firms, such as general lobbying groups, that might encounter inside information about legislation they care about. The political intelligence industry, perhaps not surprisingly, wasn’t pleased with the provision, either, especially because it could have meant detailing their clients like lobbyists do.

“Almost everybody has pushed back on something,” Mayhew said.

After the provision was stripped, good government groups were apoplectic, to the point of taking a dim view of the law as a whole. Citizens for Responsibility and Ethics in Washington, for example, said it was “lukewarm” on the ethics overhaul when President Obama signed it into law.

But Walz said there are ways to craft language so that both the political intelligence industry and government watchdogs can be happy.

“There is nothing inherently wrong about investors trying to gain as much knowledge as they can to get better positions for their client,” he said. “The problem comes in when you have an unfair advantage or you’re doing it in a manner that does not allow the general public to have that same availability.”

New bill coming

To that end, Walz and Slaughter — and Republican Chuck Grassley in the Senate — plan to introduce new political intelligence regulations sometime this session. The question is whether the public can repeat the outrage over political intelligence that swept through it last year when a news report implied lawmakers could be using their positions to perpetrate insider trading.

It was a November “60 Minutes” piece that, after raising the specter of potential insider trading among members, caused the number of co-sponsors on Walz’s STOCK Act to shoot from six to nearly 300. Will a story in the sleepy Memorial Day issue of the Washington Post have the same effect?

Walz said it might (Mayhew, for the record, doesn’t think so), especially when coupled with the public’s reaction to a change in the STOCK Act several weeks ago.

In April, Congress unanimously — and quietly — removed a STOCK Act provision requiring congressional and executive branch staffers to file financial disclosure forms to an online database, after groups raised concerns that such a requirement would expose information about intelligence officials.

Government watchdogs were again incensed, though Walz supported the measure, and batted back criticism that it “gutted” the law. But in changing the law so substantially and so quickly — the New Ulm Journal noted it took all of 15 seconds — Walz said Congress should be able to do the same to strengthen it.

“How it was done and how the public saw it, I think that showed, in and of itself, the public hunger for government reform and transparency is certainly not satisfied,” he said.

Devin Henry can be reached at dhenry@minnpost.com. Follow him on Twitter: @dhenry