Grassley's Investigation Into the SEC

Senator Charles Grassley
Mandel Ngan | AFP | Getty Images
Senator Charles Grassley

As we explained a few weeks ago, Senator Charles Grassley is not investigating the hedge fund SAC Capital. He's investigating the government's investigation of SAC Capital.

Legally, this is an important distinction. Capital Hill investigations are not supposed to look into individual cases or decide the guilt or innocence of alleged lawbreakers. The investigations are legally bound to revolve around the legislative and oversight functions of Congress.

As a practical matter, this means that most congressional investigations are not into private business activities. Rather, they are into how the government behaves.

But make no mistake: this is still a major headache for SAC. They can be subpoenaed as part of the investigation into the SEC. Any violations of securities laws that are turned up can be referred to the FBI or the SEC for further investigation. Everyone who submits documents or testifies risks possible perjury charges.

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