OPINION: This article may contain commentary which reflects the author’s opinion.
For a time last year, Republicans and some Democrats were supportive of legislation that would ban members of Congress from engaging the stock market over rising public concerns that at least some of them may be using insider information to make picks, in violation of federal law.
The legislation likely would have built upon the STOCK Act of 2012, signed into law by then-President Barack Obama, which prohibited stock trades based on knowledge of upcoming legislation that would affect markets and imposed some modest fines for violations.
But the enthusiasm died, and no new legislation was forthcoming in 2023. However, a new report is likely to regenerate interest in strengthening congressional stock trading laws or even ban members of Congress and their immediate families from any stock trades while in office.
“Former House Speaker and Democratic Rep. Nancy Pelosi of California made a 65% profit on her stock trading portfolio in 2023, according to an analysis of House of Representatives financial disclosure records by the group Unusual Whales,” the Daily Caller reported last week.
“Pelosi and her husband Paul, a venture capitalist in San Francisco, have long been known for their jointly held stock portfolio, which has made significant profits in recent years. In 2023, the Pelosi portfolio’s profits were driven by trading options contracts — which allow the holder to purchase a stock at a lower price than its market value — and outperformed the Standard and Poor’s 500 Index of the U.S. stock market’s largest companies by a margin of 40%,” the DC added, citing Unusual Whales.
Jeff Hauser, the director of the Revolving Door Project, told the New York Post regarding the excessive profits: “It’s a sign of quasi-insider trading that’s corrupt and should be banned – it’s either an addiction to risk or a sign of corruption.”
“There are teams of people at sophisticated hedge funds that exist to find minor arbitrage opportunities to make a profit. It’s preposterous to think they are finding profit where Bridgewater or Renaissance Capital is missing it,” Hauser continued.
But it wasn’t just the Pelosis who did well in the stock market last year; plenty of Republican lawmakers did, too.
I have just released the full report on politicians trading in 2023.
Like every year since 2020, US politicians beat the market.
And many in Congress made unusually timed trades resulting in huge gains.
Here are the top performers of 2023. pic.twitter.com/ykf9VICsBw
— unusual_whales (@unusual_whales) January 2, 2024
That said, Pelosi’s profits were bigger than those of the country’s largest hedge funds. The biggest of them all, Bridgewater Associations, slipped 7.6 percent last year, while Millennium Management grew by 10 percent and GOP donor Ken Griffin’s Citadel LLC gained 15.3 percent. But unlike Pelosi, those funds did not beat the S&P 500.
During her weekly press briefing in July, Nancy Pelosi was asked about her husband’s stock trading, leaving her visibly uncomfortable and upset.
“Has your husband ever made a stock purchase or sale based on info received from you?” the reporter said to a flustered Speaker.
“No! Not, okay, thank you,” she said before hurriedly leaving the press conference.
The question came after Paul Pelosi was hammered for purchasing $5 million in stock in a chip manufacturer as Congress was set to vote on legislation that could hand $52 billion to semiconductor producers.
According to a report, he was back to making several notable moves in the stock market in June, including “investing millions in Nvidia Corporation” while selling “large quantities of Visa and Apple stocks and call options,” The Epoch Times noted at the time.
The outlet reported:
According to the filing, Paul Pelosi exercised 200 call options, or 20,000 shares, of Nvidia at a strike price of $100 and expiration of June 17, 2022, worth between $1 million and $5 million.
On that same date, her husband also sold 50 call options in Apple at a strike price of $100, with the transaction listed with a value of between $100,000 and $250,000.
Call options are a contract between a buyer and a seller to purchase a certain stock, bond, commodity, or other assets at a certain price up until a defined expiration date.