Pelosi Defends Stock Investment by Members of Congress: ‘We’re a Free Market Economy’

At a weekly press conference, Speaker of the House Nancy Pelosi (D-Calif.) defended stock market investment by members of Congress after an investigation by Insider alleged that 49 members of Congress have violated laws against insider trading.

U.S. law forbids people with insider information, including members of Congress, from buying stocks on the basis of that information, and those who break these laws can be subject to criminal prosecution.

Laws against congressional insider trading were strengthened in 2012 amid a wave of insider trading in Congress; the STOCK Act, or Stop Trading on Congressional Knowledge Act of 2012, placed limitations and new reporting guidelines on federal lawmakers.

Most critically, the law began requiring members of congress to disclose trades made by themselves, their spouse, or their dependent children publicly and quickly.

Insider’s report found that a large, bipartisan swath of 49 members in both chambers had violated these laws. These include, among many others, big names like Sens. Dianne Feinstein (D-Calif.) and Tommy Tuberville (R-Ala.), and House Reps. Debbie Wasserman (D-Fla.) and Dan Crenshaw (R-Texas).

In light of this report, Pelosi was asked by a reporter whether Congress members should be barred from stock trades.

“No,” Pelosi said quickly. “We have a responsibility to report [our trades] … [and] if people aren’t reporting, they should be.”

Pressed to explain her “no,” Pelosi argued, “Because we’re a free market economy. [Members of Congress] should be able to participate in that.”

While Speaker Pelosi’s name did not appear in the report, Pelosi and her husband have made millions from stock trading since she has been in office. In fact, the Pelosis have been so successful in their stock trades that small-time investors on the social media platform TikTok began a trend of following the Pelosis’ financial releases and copying their trades to make money.

But others see the Pelosis’ trades as more problematic in view of Speaker Pelosi’s significant power and access to nonpublic information that could affect the stock market.

For instance, in July, just as the House was trying to advance antitrust legislation targeted at tech monopolies, Paul Pelosi made a bullish bet in favor of Google parent company Alphabet, while others were pulling out over concerns about the House’s pending legislation. This ultimately paid off for Pelosi, netting him $5 million.

The antitrust bill received bipartisan support, and despite being marked up, voted on, and passed through the House Judiciary Committee, action on the bill suddenly stalled, and it has sat in congressional limbo since June.

Nancy Pelosi’s spokesperson quickly denied any allegations of insider trading, saying “The speaker has no involvement or prior knowledge of these transactions.”

And these allegations against Pelosi and her husband are nothing new.

In 2011, NBC’s 60 Minutes aired an episode that accused several prominent lawmakers, including Pelosi, of insider trading.

According to that report, Paul Pelosi bought $2 million of stock in Visa in March 2008. Later the same year, the House Judiciary Committee passed legislation that would have addressed card issuers’ “swipe fees,” a bill that would have hurt the bottom line of big name card issuers. But that bill was also suddenly and inexplicably dropped and was never brought to the House floor.

Observers at the time accused Pelosi of using her influence as speaker to snuff the bill, a charge she vehemently denied.

But not long after this report, Congress passed the STOCK Act, which included the so-called “Pelosi provision”—a clause that forbade members of Congress from receiving early access to private stock offerings simply because of their position.

In December 2020, Paul Pelosi bought 25 call options in Tesla, one of the leading electric vehicle (EV) manufacturers worldwide. Both during the campaign and after being declared victor, President Joe Biden emphasized the importance of EVs in his administration’s efforts to reduce U.S. carbon emissions.

Since then, Speaker Pelosi has been outspoken in support of the Build Back Better bill, which includes, among other climate provisions, hundreds of billions in funding for an EV tax credit and an EV charging station network.

The purchase quickly raised some eyebrows as commentators considered the ethics of such a purchase ahead of Biden’s pro-EV regime.

Pelosi’s position on members of congress trading is far from a universal position among those in her party.

In a Dec. 7 tweet, Rep. Alexandria Ocasio-Cortez called it “absolutely ludicrous” that members of Congress are allowed to dabble in the stock market, suggesting that the power members of congress have to access information gives them an unfair advantage in the market.

“The access and influence we have should be exercised for the public interest, not our profit,” Ocasio-Cortez wrote. “It shouldn’t be legal for us to trade individual stock with the info we have.”

In a statement given to Insider, progressive Sen. Elizabeth Warren expressed much the same sentiment.

“We need both tougher laws and enforcement of those laws,” Warren said.

“The American people should never have to guess whether or not an elected official is advancing an issue or voting on a bill based on what’s good for the country or what’s good for their own personal financial interests,” she added.

It is illegal for Congress members to trade based on non-public information gathered during their official duties.

House Speaker Nancy Pelosi’s husband cashed in on Big Tech just as Congress was set to pounce

BY SOPHIE MELLOR, Fortune, July 8, 2021 8:26 AM EDT

The week before the House Judiciary Committee voted on reigning in big tech, Speaker Nancy Pelosi’s husband exercised a bullish bet on Google-parent Alphabet, in a timely transaction that netted him $5.3 million.

The antitrust bill was advanced as a push by the government to curb the “unregulated power” of big tech firms Google, Amazon, Apple and Facebook. It was the final part of a six-part package called “Ending Platform Monopolies Act” aimed at restricting how big tech companies offer their products to ensure they don’t use their size to dominate the market.

However, despite its good intentions, the market reaction to the judiciary panel approving the legislation was muted—shares in big tech companies in fact rose after investors found the House proposal to be no real threat.

Paul Pelosi, who bought 4,000 shares of Alphabet on June 18 (as revealed in a financial disclosure signed by Nancy Pelosi and filed on July 2), made an initial $4.8 million gain from Alphabet’s rising share price, and has since seen his gain grow to $5.3 million.

Paul bought the stock by exercising a call option, which allows investors to speculate on stocks they do not own by entering into a contract that allows them to buy a stock at a later date at a promised price. The upshot: a call option is a good tool for an investor who believes the stock price will go up in the future. In Pelosi’s case, the call options he’d previously bought for Alphabet (which were due to expire the day of his purchase) allowed him to buy it at $1,200 a share while the shares closed that day just over $2,500, a difference that accounted for his profit.

Paul Pelosi also reported buying call options for Amazon, Apple and NVIDIA, but he did not report exercising them.

Nancy Pelosi’s spokesperson said “The speaker has no involvement or prior knowledge of these transactions,” in an emailed statement on Wednesday, adding that Speaker Pelosi doesn’t own any stock.

Capitol gains
Great stock timing in DC isn’t exactly novel. Republican senators Richard Burr and Kelly Loeffler had inside knowledge of the impending COVID-19 crisis when they sold shares in January 2020.

Burr sold $1.7 million worth of stock holdings, while the former senator, Loeffler, wife of New York Stock Exchange chairman Jeffrey Sprecher and richest member of Congress at the time, unloaded up to $3.1 million worth of stock after getting closed-door briefings on the COVID-19 threat.

It is illegal for Congress members to trade based on non-public information gathered during their official duties, but it is hard to charge members of Congress with insider trading. Neither Burr not Loeffler faced any charges following inquiries.

But while it is hard to prosecute politicians over such stock sales, Twitter is less forgiving. ‘Nancy Pelosi Insider Trading’ began to trend on the social media service and people have called for her removal from office.

Cbsnews.com
circa 2011

pelosi and visa

As Steve Kroft reported on “60 Minutes,” Pelosi is one of many lawmakers whose stock market trades could have been seen as a conflict of interest. The former speaker and her husband have participated in at least eight IPOs, one of which was from Visa in 2008 - just as a troublesome piece of legislation that would have hurt credit card companies began making its way through the House. The Pelosis purchased 5,000 shares of Visa at the initial price of $44 dollars. Two days later it was trading at $64.

Now Newsweek and The Daily Beast report that this stock purchase was made as Visa was engaged in a full-court press to lobby Pelosi to stop legislation to curb credit-card swipe fees to vendors.

In 2007, Visa used an army of lobbyists to try to influence Pelosi, including one of her former advisers, Dean Aguillen, Newsweek reports. Aguillen left Pelosi’s office to work for the lobbying firm Ogilvy. By law, he could not lobby Pelosi’s office directly, but he did lobby Congress on the credit card issue and offered advice to other lobbyists on that particular mission.

In addition to exploiting the revolving door between Congress and lobbying firms, Visa’s political action committee made a $1,000 donation to Pelosi’s re-election campaign, Newsweek reports (Visa headquarters is in Pelosi’s home district). Two days after that donation was made, Pelosi met with Visa executives in her office. Aguillen also contributed $1,000 to Pelosi and another $1,000 to the campaign arm of the House Democratic caucusin the first half of 2008.

The former speaker maintains she wasn’t influenced by Visa’s lobbying efforts or her husband’s stock purchases. “I will hold my record in terms of fighting the credit card companies as speaker of the House or as a member of Congress up against anyone,” she told “60 Minutes.”

Indeed, the swipe fee legislation opposed by credit card companies eventually passed. Additionally, in 2008 — before the Pelosis’ stock transaction — the House passed the Credit Cardholders’ Bill of Rights over the objections of the industry.

Drew Hammill, a spokesman for Pelosi, said her husband Paul Pelosi’s finances are kept distinctly separate from the congresswoman’s legislative work, Newsweek reports.

Pelosi is far from the only example of a legislator about whom questions have been raised.

“We know that during the health care debate people were trading health care stocks,” Peter Schweizer, a fellow at the conservative Stanford think tank the Hoover Institution, told “60 Minutes.” “We know that during the financial crisis of 2008 they were getting out of the market before the rest of America really knew what was going on.”

With the new focus on congressional “insider trading,” legislation to stop it is gaining momentum. Democratic Reps. Louise Slaughter of New York and Tim Walz of Minnesota have introduced legislation to stop insider trading in Congress. But the bill, which has been introduced before, has never had more than 14 congressional sponsors.

Today, however, Sens. Scott Brown, R-Mass., and Kirsten Gillibrand, D-N.Y., and said they will introduce the legislation in the Senate. Several other lawmakers are now saying they could support the measure, Roll Call reports, including Pelosi.

Watch the “60 Minutes” report at web site:

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