Nancy Pelosi-backed stock trading ban faces uphill battle

Hopefully a bill with a different name will stop those in Washington from breaking the rules.

This week, House Democrats unveiled the text of a bill aimed at preventing members of Congress, their spouses and other officials, including Supreme Court justices, from owning or trading in stock. individual.

The “Financial Conflicts of Interest in Government Act” is a 26-page bill that could be voted on this week, according to Business Insider.

The bill would prohibit senior officials in the executive, legislative, and judicial branches, as well as their spouses and dependent children, from owning or trading in stocks, as well as cryptocurrencies and other digital assets.

To comply with the bill, members of Congress can place interests in qualified blind trusts. The bill also allows investments in other investment vehicles such as diversified mutual funds and ETFs; US Treasury bills, bonds and notes; and state and municipal bonds.

In the past, House Speaker Nancy Pelosi has opposed any ban on stock trading, once saying that members of Congress “should be able to participate” in the stock market since the United States is a ” free market economy”.

Pelosi and her husband, venture capitalist Paul Pelosi, are among the most active stock traders in Congress, by some estimates.

While online pressure campaigns may have helped change Pelosi’s mind about his stance, there are still many hurdles to clear for the bill to pass the lower house.

For one, the last session of Congress will only last Wednesday through Friday afternoon before a break until after the November elections. In addition, Steny Hoyer, House Majority Leader and second-tier Democrat, is said to oppose the ban.

Is insider trading a problem?

What’s crazy is that there is already a law on the books that prohibits members of Congress from exchanging insider information that they might receive in their role as lawmakers.

The Stop Trading on Congressional Knowledge Act is basically being ignored by members of Congress, with an insider investigation finding that 72 members of Congress violated the STOCK Act.

Perhaps part of the reason so many lawmakers ignore the STOCK Act is that the standard penalty for violating the law is only $200 and even that fine can be waived by ethics officers. of the House and the Senate.

Meanwhile, The New York Times reported that nearly 100 lawmakers or their family members reported deals at companies influenced by the committees they serve on.

Under the Stock Act, members of Congress are authorized to buy and sell stocks, bonds and other financial instruments, but they cannot trade inside information and must disclose within 45 days any transaction worth more than $1,000 that they or their immediate family members have made.

Pelosi’s prolific business

Pelosi got a lot of attention for her at the right time stock and options trading. In March 2021, Pelosi caught red-handed for buying 25,000 shares of Microsoft (MSFT) less than two weeks before Microsoft signs a $22 billion deal with the US military. (Source: SEC). Recently, Pelosi made another happy trade, this time on the saleside.

On July 26, Pelosi sold 25,000 shares of NVIDIA for $165.05 per share, realizing a loss of -$341,365. At the time, that seemed like a rare miss for the seasoned Congressional trader.

However, a month after the sale, the United States enacted new restrictions that would hamper NVIDIA’s ability to sell high-tech semiconductors to China. This resulted in a massive loss of future revenue for the chip company. Following the news, NVIDIA shares plunged to a 52-week low, making Pelosi’s July sale of NVIDIA a sharp move in hindsight. If Pelosi had kept those NVDA shares, his loss of -$341,365 would have been over $1 million based on NVIDIA’s current price.

Comments are closed.