U.S. lawmakers have recently been subjected to a microscope to trade stocks in companies that they or their employees may have some inside knowledge of.
The rules for buying and selling stocks were reinforced for Congress in 2012 by the Congressional Knowledge Stopping Act.
Developing rules for members of Congress to trade stocks is an ongoing process. The Congressional Bipartisan Stock Ownership Prohibition Act of 2022 was introduced in February by Senators Elizabeth Warren (D-Mass.) and Steve Daines (R-Mont.), as well as the Representatives. featuring Pramila Jayapal (D-Wash.) and Matt Rosendale (R-Mont.).
The proposed law would cover members and their spouses. It emerged out of anger that members of Congress traded stocks at the start of the pandemic, before its severity was known to the public.
Ask them to divest their ownership of individual stocks, bonds, commodities, futures and other securities including interests in hedge funds, derivatives, option and other complex investment vehicles.
Members may continue to own and trade popular, widely held mutual funds (e.g. mutual funds and exchange-traded funds), as long as they do not cause conflicts of interest and diversify .
Although the bill received widespread support, Congress was unable to act before it learned in October and its fate is uncertain.
A particularly important member of Congress whose spouse is in the spotlight because of some not-so-smooth deals.
Disclosure reveals loss
The husband of US House of Representatives Speaker Nancy Pelosi is revealed to have lost money as part of the disclosure process. Total losses from trading in Micron Technology, Nvidia and Walt Disney options amounted to nearly $900,000.
The trading report shows that her husband Paul Pelosi lost $392,575 from the sale of Micron options he bought last December. He also sells Nvidia call option total loss is $361,476. Call options at Walt Disney reported in the reveal ended up losing $132,824.
The transactions took place on September 16.
About 20% of members of Congress from both sides of the aisle were trading stocks in 2021, according to UnusualWhales.com.
Other government officials are under surveillance
An investigation into public financial disclosures last week disclosure that more than 2,600 executive branch officials invested in shares of companies their agency oversees between 2016 and 2021.
The operation included an official at the Environmental Protection Agency who invested in oil and gas stocks, a Food and Drug Administration employee authorized to own stockpiles of food and drugs. banned, and a Defense Department official bought stock in a company before it signed the deal with the Pentagon.
The Wall Street Journal report that most disclosure documents are not online or easily accessible. “The review is the most comprehensive analysis of investments held by law enforcement officials who have broad but unseen influence over public policy,” the publication said.
The 2,600 officials serving in both the Republican and Democratic administrations add up to more than a fifth of the senior staff of the 50 agencies involved in the operation.
Some of the provisions of the proposed legislation aimed at Congress are listed below.
- The bill includes members of Congress and their spouses.
- It requires them to divest ownership of individual stocks, bonds, commodities, futures and other securities including an interest in a hedge funda derivative, an option, or other complex investment vehicle.
- Members may continue to own and trade popular, widely held mutual funds (e.g. mutual funds and exchange-traded funds), as long as they do not cause conflicts of interest and diversify .
- Treasury securities, government employee retirement plans and benefits in small businesses are not included in the ban.
- Property received as compensation from a member’s spouse’s primary occupation is not covered by the restraining order. The spouse of a member whose primary occupation is trading property for a client may continue to engage in that profession.
