Lawmakers have access to corporate information and foresight about stocks that the general public does not have access to.
It is well known that corporate lobbyists must share a great deal of insider information with congressmen and congresswomen in order for these legislators to draft legislation that will or will not benefit the business at issue.
It is for this reason that many, including other members of Congress like Alexandria Ocasio-Cortez, have argued that lawmakers should refrain from dealing in stocks.
AOC posted a statement on Instagram saying, “I choose not to hold any [stocks] so I can remain impartial about policymaking.”
This and other statements from high-profile Congresspeople came in response to a number of scandals involving lawmakers and other government officials who made suspicious trades during the ongoing COVID-19 situation.
One outstanding example of such a suspicious trade involves Senator Richard Burr (R-N.C.). The Securities and Exchange Commission is investigating Burr for fortuitous stock trades that he made early on in the pandemic. Burr has even confessed that not all his trades were based on public news reports but that some were made using information that was not available to the public. That, for the record, is the very definition of insider trading.
The suspicious trades and those clearly based on insider info were not exclusive to members of Congress. The Fed announced in October that it would prohibit officials from buying stocks and bonds after two Fed presidents resigned over allegations of insider trading.
In theory, members of Congress are forbidden from exchanging stocks and bonds based on non-public information by the Stop Trading on Congressional Knowledge, or the “STOCK Act.” However, during a recent press conference, Nancy Pelosi said that lawmakers should obey this law and refrain from insider trades. She said, “If people aren’t reporting these trades, they should be.”
It has long been the case that national-level politicians make enormous profits simply by being in the right position to open channels of opportunity to big financial hitters to make even more money. The average Congressperson makes $174,000 a year while House members make an annual average of $223,500. These are very large salaries, but they are not large enough to explain why many, if not most, members of Congress leave the position as multi-millionaires. If they were living very modestly, it might be possible. But we all know that they are not living modestly. Practically none of them are. They are all, almost without exception, living beyond their well-above-average means. So the question is, how common is insider trading. Further, how much selling of influence goes on in Congress?
According to Ballotpedia.com, in 2004 the average net worth of US Congress members was roughly $6.5 million. In 2011 that went up to $7.8 million.
Considering the massive collections of opulent homes these people tend to buy, the private jets, the expensive cars, the overpriced dinners, vacation homes, clothing, and expenses, there is no way a salary of $200,000 or less could ever amount to millions without some additional dealing under the table. It is not mathematically possible.
Of course, it must be said, there are a handful of Senators who maintain a modest net worth. Examples include the likes of Deb Fischer and Mark Pryor who respectively had net worths of $248,001 and $8,500 in 2012. Fischer likely had to scrimp and save to accumulate a number like that, and Pryor was probably spending a little bit immodestly. But he certainly was not engaging in insider trading to any significant degree, it Ballotpedia.com is reporting accurately. At least, he could not have been doing any successful insider trading and end up with a balance like that.
As of this year, Nanci Pelosi’s net worth has been figured at approximately $120 million. That’s roughly 17 times the 2011 average for top-ranking politicians.
All of this came to the public’s attention when the most recent Periodic Transaction Report on Pelosi’s trading habits was released. It shows that she bought millions in call options from companies like Micron, Alphabet, Roblox, Disney, and Salesforce.
A call option is an advanced stock trading move that allows the buyer to purchase underlying assets at a given price inside of a certain period.
It’s the kind of thing only seasoned traders would do or traders who can afford some very expensive professional advice.
Because, of course, elitist Nancy Pelosi would be involved in something like this.