Pelosi's husband makes 56% a year in stock trading, is it an abuse of power? The United States is quarreling again

At the end of last year, in order to quell the storm of Stock Speculation among Fed officials, the Fed introduced new rules prohibiting policymakers and other senior officials from speculating in stocks. For many investors, however, this is not enough, and calls to ban members of the U.S. Congress from trading stocks have recently intensified.

According to Bloomberg reported on February 10, democrats and Republicans have proposed different degrees of restrictions, Senate majority leader Schumer expressed support for the ban, and House Speaker Pelosi's attitude has changed 180 degrees from opposition to now.

However, the ban on stock trading has also been resisted by some lawmakers, who have questioned whether it will involve their family business and whether it will hinder public services.

"Capitol Hill Stock God"

Last year, on the social platform TikTok, a community of young investors used stock trading information disclosed by House Speaker Pelosi and her husband as a stock pick guide.

However, Pelosi has repeatedly stressed that she is not involved in stock trading, and her husband, Paul Pelosi, often trades large sums, being dubbed the "Capitol Hill stock god" by the media and the "biggest whale" and "psychic" in the market by some users. In 2020, the Pelosi couple's return on investment was as high as 56%, while Buffett's return on investment was 26% over the same period.

According to congressional strading.com, a stock trading database for lawmakers, Paul bought call options on several tech stocks, including Google, Roblox and Disney, for millions of dollars last year.

Some media believe that Paul's trading timing is related to some policy releases and legislative processes, so it is widely debated.

For example, in January last year, before the Biden administration announced subsidies for electric vehicles, Paul bought millions of dollars worth of Tesla stock;

In March last year, Paul bought Microsoft stock at a low price before microsoft received a $22 billion order for AR combat helmets from the U.S. Department of Defense.

Last July, at the time of the antitrust investigation of large U.S. technology companies, Paul went long with Google, Google was ultimately unaffected, the stock price soared, and Paul made a lot of money.

Although Pelosi has repeatedly said that she is "unaware of these transactions," there are questions about Paul's operations based on Pelosi's inside information.

Last December, Pelosi was publicly asked whether members of Congress should be restricted from buying stocks. She dismissed this, stressing that "under a free-market economy, members of Congress should have the right to participate in this market."

But with public opinion and increasing pressure from both parties in Congress, Pelosi's attitude changed drastically in January, and she was open to banning lawmakers from trading stocks.

Indecisive

According to business insider, members of Congress and their immediate family traded $631 million worth of stocks and financial assets in 2021, of which $267 million was bought and $364 million was sold. Of these transactions, 60% are stocks and the rest are funds, bonds and other assets. Among them, Republicans prefer energy stocks, and Democrats prefer technology stocks.

Some argue that the bill pushed by members of Congress is related to corporate interests, and if members of Congress themselves hold shares or other securities of individual companies, there may be conflicts of interest.

In fact, in 2012, the United States introduced the STOCK Act, which aims to regulate the securities trading process of members of Congress, that is, members of Congress may not use non-public information obtained from their positions to trade stocks for private interests, and members should disclose relevant information within 45 days of their financial transactions.

But the law was almost useless, with an investigation finding that 49 members of Congress and 182 senior staff members did not disclose transaction information in a timely manner as required.

According to NPR last year, Richard Burr, chairman of the Senate Intelligence Committee of the U.S. Congress, threw away a large number of stocks before the U.S. stock market crash while telling the public that the U.S. epidemic was preventable and controllable.

At present, the Senate and the House of Representatives have been proposed in several versions of the legislative proposal to prohibit stock trading.

The version, co-drafted by Democratic Senator Elizabeth Warren and Republican Senator Steve Danes, states that members of Congress and their spouses would be barred from holding and trading individual stocks, bonds, commodities, futures and other securities, including equity in hedge funds, derivatives, options or other complex investment vehicles. The bill does not prohibit investment in ordinary and widely held funds, such as mutual funds and ETFs, as long as there are no conflicts of interest and are diversified.

Democratic members of the House of Representatives are also planning to adjust the content of the "Stop Using Congressional News Trading Act" to completely prohibit members of Congress and their close relatives from directly buying and selling individual stocks, and the management guidelines for senior employees of Congress to trade stocks may also be modified, which means that senior employees on Capitol Hill will be prohibited from trading stocks.

In addition, several bills introduced so far have required incoming members of Congress to place their stock portfolios in a traditional, confidential trust, managed by an independent trustee who can buy and sell shares without lawmakers' knowledge.

However, according to Bloomberg, some lawmakers are currently hesitant about whether the ban will be extended to family members. What if a spouse of a member of Congress receives a stock reward for working in a company, what are the penalties for non-compliance, and whether senior employees should face a similar ban... These issues will take more time to resolve.

This article originated from the International Finance News