A New Dilemma For Insider Trading: “PELOSI Act”
Insider trading by members of Congress has been one of the most controversial and contentious issues since the advent of the 21st century and on various occasions this topic has been debated amongst lawmakers to find the best possible remedy.
In April 2012, an act was passed by the name of Stop Trading on Congressional Knowledge or more commonly referred to as the STOCK Act to put an end to insider trading by Congress members. The main emphasis of this body of regulations was that all congress members will be bound to disclose their trades within 45 days of executing them. But even after boundation, a lot of congress members failed to report timely disclosures.
U.S. Senator Josh Hawley on January 24, 2023 introduced a bill to ban lawmakers from stock trading during their tenure in elected office. The name which he gave to this proposed bill is quite intriguing, “Preventing Elected Leaders from Owning Securities and Investments” or short for PELOSI Act. This bill would prohibit members of Congress and their spouses from holding or trading individual stocks and the members found in violation will have to return their earned profits to American Taxpayers according to the proposed bill.
The Republican senator named this legislation by keeping former House speaker Nancy Pelosi in his focal point, as he like many other GOP members are of the opinion that she and her family may have taken the most advantage of non-public information for their private interests.
Last year, venture capitalist and husband of the Congresswoman, Paul Pelosi, sold up to $5 million worth of shares of a computer chipmaker and leading GPU manufacturer Nvidia Corp (NVDA:US), as the House prepared to vote on a bill focused on domestic chip manufacturing.
“For too long, politicians in Washington have taken advantage of the economic system they write the rules for, turning profits for themselves at the expense of the American people.” Hawley remarked.
Prior to Hawley’s bill, a bipartisan duo in the house reintroduced a bill on the same issue. Member of Democratic Party Rep. Abigail Spanberger and GOP member Rep. Chip Roy reintroduced the Trust in Congress Act this month, marking the third time the pair have introduced the legislation.
As per bill requirements, members of Congress, their spouses and dependent children will have to place certain investment assets into qualified blind trust, while the member performs his/her respective duties in the office and 180 days after the end of their tenure in congress.
“Our TRUST in Congress Act would demonstrate that lawmakers are focused on serving the interests of the American people – not their own stock portfolios,” Rep. Abigail Spanberger said.
The Trust in Congress Act goes beyond the STOCK Act of 2012 as it only prohibits the use of non-public information for private profit and interests, which includes insider trading by members of Congress.
Decisions on presented bills have yet to be made, but it would not be incorrect to say that the eyes of the entire U.S. political body are on the outcome.