Despite the potential for conflicts of interest between their legislative duties and personal money, House Speaker Nancy Pelosi dismissed the idea of prohibiting congressional politicians and their spouses from having shares in specific companies on Wednesday.
“No,” said Pelosi, D-Calif., in response to a question on whether she would support such a ban at a press conference.
She stated, “We’re a free market economy.” “They ought to be able to take part in that.”
Pelosi’s criticism of the concept of a stock purchase prohibition came in response to a question regarding a Business Insider investigative piece this week on parliamentarians’ stock ownership, and after a number of senators have been embroiled in-stock purchase scandals since the Covid-19 outbreak began.
According to the Business Insider series, 49 members of Congress and 182 top congressional staffers broke the STOCK Act, which requires public disclosure by themselves and family members within 45 days of an individual stock, bond, and commodity futures transactions or acquisitions.
The Stop Trading on Congressional Knowledge Act, which was signed into law in 2012, aims to prevent politicians and staffers from trading on knowledge obtained through their jobs, as well as conflicts of interest.
However, infractions of the STOCK Act frequently result in fines of around $200 if they are prosecuted at all.
Nancy Pelosi stated on Wednesday that “we have an obligation to record” stock trades.
The speaker stated that she was not familiar with the Business Insider series’ conclusions.
“However, if [stock trades] aren’t being reported, they should be,” Pelosi continued.
In the first of a series of tweets regarding the lack of a ban on politicians owning stock, Walter Shaub, former head of the US Office of Government Ethics, slammed Pelosi’s allusion to the “free market economy.”
“What a foolish remark!” Shaub penned the piece. “She could have just as well said, ‘Let them eat cake.'” It is, after all, a free-market economy. However, the common schmuck does not receive private briefings from government experts containing nonpublic information directly related to stock prices.”
“In an objective universe, free of politics, members of Congress would be derided for the stupidly inadequate ethical guidelines they’ve designed for themselves,” Shaub stated in another tweet.
The Federal Reserve placed a broad restriction on central bank staff owning individual stocks and bonds in October.
The restriction came when two Federal Reserve regional presidents, Robert Kaplan of Dallas and Eric Rosengren of Boston, resigned after it was revealed that they had traded individual securities in 2020. Their trades took place as the coronavirus wreaked havoc on markets, and the Fed itself was making huge asset purchases to keep markets calm.
Controversies concerning legislators’ stock holdings
A number of good-government organizations and some lawmakers have proposed a stock ownership prohibition or requiring members of Congress to put their financial interests in a blind trust while in office.
Allowing politicians to continue to own index funds that track financial market sectors is considered one method to allow them to earn investment returns while restricting their ability to gain from or be perceived as benefiting from information they get about specific companies.
In 2019, then-Rep. Chris Collins, R-N.Y., pled guilty to federal charges of informing his son about nonpublic information he had gotten about a failed drug study at a pharmaceutical company, just before public exposure of that information put the company’s stock into freefall.
Collins had been a board member of Innate Therapeutics and had praised the company’s prospects for years, even while serving in Congress.
Collins was also Innate’s largest shareholder in early 2016, with about 34 million shares, or more than 17 percent of the firm. Cameron and Caitlin, his children, were once the business’s third and fourth-largest stockholders, with each owning 2.65 percent of the corporation, or 5.2 million shares, at the time.
Collins was pardoned by President Donald Trump in December 2020, just before Trump left office, after serving a 26-month jail sentence. Collins was the first member of Congress to back Trump in his 2016 presidential campaign.
Last year, federal prosecutors looked into stock trades made by persons connected to Sen. Richard Burr, R-N.C., Sen. Jim Inhofe, R-Okla., then-Sen. Kelly Loeffler, R-Ga., and Sen. Dianne Feinstein, D-Calif., ahead of a Covid-sparked market fall.
Those investigations came to a halt without any criminal charges being brought
However, the Securities and Exchange Commission is investigating whether Burr, his brother-in-law Gerald Fauth, and Fauth’s wife engaged in insider trading based on nonpublic information regarding Covid that Burr got as part of his position. Fauth is the head of the National Mediation Board, which helps labor-management relations in the railroad and airline industries in the United States.
Sen. Rand Paul of Kentucky, a Republican, revealed for the first time in a disclosure form in August that his wife Kelly had purchased shares of drug company Gilead Sciences in early 2020, one day after the first U.S. clinical trial for Gilead’s redeliver as a therapy for Covid-19 began.
In the previous decade, Paul and his wife had never acquired or sold shares in a single firm.
Paul’s revelation came more than 16 months after the STOCK Act’s legal deadline for disclosing it had passed.
Tuberville, like Paul, disclosed his information after the STOCK Act’s deadline had passed.