Democratic House Speaker Nancy Pelosi insists she does not own any stocks but her husband Paul does. They bought millions of dollars worth of call options in companies ranging from Alphabet to Walt Disney between Dec. 17 and Dec. 22, 2021, and Sen. Pelosi has to disclose that. Young investors are watching and learning.
Paul Pelosi runs Financial Leasing Services, a real estate and venture capital investment and consulting firm. He has made big-money bets in recent years on companies his wife is supposed to regulate, including Amazon, Apple and Google.
Buyers of call options are considered to be bullish, betting that the share prices will rise. Pelosi’s market moves are attracting admirers and imitators among retail traders who have watched her and her husband Paul’s past trades, and hope to duplicate the Pelosis’ success.
The House Speaker is attracting renewed criticism of herself and members of Congress who trade in stocks despite having access to insider information.
“Members of Congress have access to non-public information and the ability to influence legislation, giving them an advantage in the stock market over the rest of us,” wrote Meghan Faulkner, an author at the nonprofit Citizens for Responsibility and Ethics in Washington (CREW).
“Americans shouldn’t have to be concerned about members of Congress being more focused on their stock portfolio than on the country’s problems and their constituents’ best interests,” Faulkner wrote in a CREW commentary and analysis.
Some members of Congress including Rep. Alexandria Ocasio-Cortez (D.-N.Y.) support banning lawmakers and their spouses from trading individual stocks and other assets, arguing that lawmakers have insider information and can write and pass policy.
“We’re a free-market economy,” Pelosi told reporters during a Dec. 15 press conference when asked if she would support such a ban. “They should be able to participate in that.”
The buyer of call options has the right, but not the obligation, to buy the underlying security in the future at the specified strike price. The strike prices of Pelosi’s options were not disclosed but they expire in September 2022 or January 2023, giving them the appearance of long-term levered bets.
In addition to Alphabet and Disney, Pelosi bought Micron, Roblox and Salesforce call options, Congresstrading.com reported.
Pelosi’s stock trading disclosures are a treasure chest for a community of individual investors on TikTok, NPR reported. “Shouts out to Nancy Pelosi, the stock market’s biggest whale,” said user ‘ceowatchlist.’ Another said, “I’ve come to the conclusion that Nancy Pelosi is a psychic,” while adding that she is the “queen of investing.”
Paul Pelosi made a fortune in real estate and venture capital in the San Francisco area. His transactions are not thought to violate any laws regarding members of Congress, their spouses and insider trading.
In 2021, Paul Pelosi profited from a bullish options bet on Google-parent Alphabet in a well-timed transaction a week before Congress voted on antitrust legislation that could severely limit how big tech conducts its business.
At the time, Speaker Pelosi said she didn’t own any stock and “has no involvement or prior knowledge of (her husband’s) transactions,” her spokesman Drew Hammill said in an email statement to Bloomberg. Congress’s responsibility is to “the consumer and competition,” Nancy Pelosi told reporters in June, 2021.
Dinesh Hasija, an assistant professor of strategic management at Georgia’s Augusta University, studies whether the market moves based on congressional disclosures. His ongoing research suggests that it does, NPR reported.
“Investors perceive that senators may have insider information,” he said. “And we see abnormal positive returns when there’s a disclosure by a senator.”
Lawmakers attracted attention early in the covid pandemic when some sold their stocks right before the financial crash, according to congressional financial disclosures.
Sen. Richard Burr, head of the Senate Intelligence Committee, warned some constituents in February 2020 about the dire effects of the coming pandemic and he sold up to $1.72 million worth of personal stocks on a single day that month. A bipartisan group of senators also came under suspicion, including Senators Dianne Feinstein, James Inhofe and Kelly Loeffler. They were investigated by federal law enforcement but not charged with insider trading — a very difficult charge to make against a sitting lawmaker, NPR reported.
In October, the Federal Reserve announced a ban on central bank officials owning individual stocks and bonds. This happened after two Federal Reserve regional presidents, Robert Kaplan of Dallas and Eric Rosengren of Boston, disclosed that they had traded individual securities in 2020. These trades took place while the Fed itself was making massive asset purchases in an attempt to keep markets stable during the coronavirus outbreak.
Sen. Sherrod Brown (D-OH) has sponsored the Ban Conflicted Trading at the Fed Act.
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