– When President Obama signed the STOCK Act into law last spring, the legislation co-sponsored by U.S. Rep. Tim Walz that explicitly banned insider trading by congressional members and government employees was hailed by watchdog groups as one of the most significant congressional reforms in more than a decade.

Now, amid federal inquiries into the burgeoning financial field of political intelligence, Walz is mounting a new campaign that would mandate greater disclosure for firms that analyze the U.S. government for investors.

But's he also dealing with mounting criticism of STOCK, an acronym for Stop Trading on Congressional Knowledge, which he made a cornerstone of his re-election campaign last fall.

Since passing the legislation, the House and Senate have rolled back several of the act's disclosure requirements and delayed others, drawing the ire of the same open-government advocates who praised them little more than a year ago.

"We hailed it as a fairly significant accomplishment. Now, we really have discussed … putting a little asterisk beside the STOCK Act," said Lisa Rosenberg, government affairs consultant with the Washington, D.C.-based Sunlight Foundation. "We don't really count it anymore."

Walz has taken criticism of the STOCK Act personally, fiercely defending what he sees as its merits. Last election season, the former Mankato high school civics teacher cited the bill as proof of his bipartisan bona fides in a polarized, gridlocked Congress. Walz and fellow House Democrat Louise Slaughter of New York had worked since 2007, with help from Republican Sen. Chuck Grassley of Iowa, to shepherd the bill through Congress.

"It is still a major accomplishment," Walz said.

No illusions

Last month, in mostly empty congressional chambers, House and Senate leaders used a motion called "unanimous consent" to change that law. Because the motion required approval only by members present, the bills passed each chamber in fewer than 30 seconds, wiping away years of work.

"Congress is trying as hard as it can to backpedal on it," said Craig Holman, government affairs lobbyist for the Washington, D.C.-based Congress Watch.

Buoyed by a National Academy of Public Administration report that expressed concern that the reporting requirements could blow the cover of some covert national security employees, the bill exempts congressional staffers and many executive branch workers from the online reporting requirements. Although Congress, the president, the vice president, Cabinet members and congressional candidates are still bound by the requirement, the bill delayed implementation until next spring.

"I have no illusions that this is the total fix," Walz said. "If you pass one of these good governance laws, don't think it's over. You've got to keep updating it."

Within weeks, Grassley, Slaughter and Walz plan to roll out legislation that would require the players in the political intelligence industry — law firms, brokerages and other companies that analyze the U.S. government for investors — to shed light on their activities by disclosing their client lists.

Gleaning insider knowledge on Capitol Hill has been a common practice by lobbyists in Washington, D.C., for decades, said Richard Painter, a University of Minnesota Law School professor and former chief ethics lawyer for President George W. Bush. But the demand for information has swelled as more traders realize that decisions made in Washington move markets and shape entire industries for years, he said.

A 'ghost industry'

Lobbyists and brokerage firms work the halls of Congress and schmooze at big-dollar fundraisers in hopes of digging up any tips that could benefit their clients. A tip seemingly as harmless as the fate of the sugar subsidy program in the pending U.S. farm bill could set the markets abuzz with activity, observers say.

During last year's STOCK Act debate, House leaders stripped out a portion that would have forced political intelligence workers to register much like lobbyists do, allowing the Securities and Exchange Commission (SEC) to better monitor their activities. As a compromise, the final legislation authorized a government study of the political intelligence market. The report didn't yield much.

The Government Accountability Office struggled to document how much the private government information trade is driving profitable investments. Investigators also failed to get a handle on the industry's reach.

The SEC and the Justice Department are investigating the trading activity spawned by one firm's tip to its clients that spurred a rush on health care stocks in early April. But as a single firm comes under scrutiny, more are cropping up, said Michael Mayhew, chairman and director of research at Integrity Research Associates, which tracks the industry.

"It's almost a ghost industry," Holman said. "People know it exists, but no one is really sure where."

The definition of political intelligence remains murky. When contacted by the Star Tribune, several members of Minnesota's congressional delegation said they had no knowledge of contact with political intelligence workers.

"It's growing in the shadows," said Lisa Gilbert, director of Congress Watch at Public Citizen. "That's why the solution is really just transparency."

Any measure will face resistance from financial companies and other groups arguing that legislation will restrict legitimate activities, Holman and Rosenberg said.

Walz remains resolute. "There should be and must be a way to make it known to these folks that someone is watching," he said.

Corey Mitchell is a correspondent in the Star Tribune Washington Bureau. Twitter: @C_C_Mitchell