Members of Congress have been found to profit from stock trading, raising concerns about ethical conduct and conflicts of interest.
Unusual Whales’ report highlighted a decline in disclosed congressional transactions, indicating potential public scrutiny as a contributing factor.
Members of powerful committees traded stocks in sectors legislated by their committees, and Democrats saw higher average returns compared to Republicans.
“Congress blew the market out of the water,” the report read.
“Of all the mischiefs objected to the system of measures beforementioned, none is so afflicting, and fatal to every honest hope, as the corruption of the legislature,” Thomas Jefferson wrote in 1792.
“We hope … this report (with the history of our previous research) will be good enough to end the argument about Congress and trading,” the report noted. “Over the last four years, we have shown that numerous in Congress continue to trade and outperform equity markets.”
“I have no insight into how trades are made, and am only notified after they occur,” Rep. Mark Green said.
“In fact, in my first year in Congress, to go above and beyond even the hint of impropriety, I instructed my broker in writing to manage my family’s investments and to disregard any instructions from me should I try to provide input (which I have not).”
“Let’s hope ‘UnusualWhales’ isn’t a math teacher. Their calculation couldn’t be more wrong,” a spokeswoman of Rep. Garret Graves said. “Garret has largely stopped trading stocks and this has resulted in UNDER-PERFORMANCE of the market average.”
The report also detailed instances of trading in tech companies, war stocks, and taking advantage of crises.
“Numerous members in Congress traded war stocks before the [Israel-Hamas] conflict,” the report read.
Democratic Rep. Lois Frankel “sold First Republic Bank, FRC, on March 16th, avoiding the remaining 80% drop that happened as the bank itself was liquidated.” Frankel then “bought JPMorgan, JPM, the bank buying FRC on March 22nd, before the deal was announced.”
Specific attention was given to Democratic Rep. Nancy Pelosi’s trading activities.
“We are a free market economy. Congress should be able to participate in that,” Pelosi said of investing in 2021.
“One week after Chinese President Xi [Jinping] visits her home state of California, and before Biden announces new US semiconductor focuses, her husband decides to buy two million dollars of deep in-the-money Nvidia calls, the same company she divested from due to conflicts a year earlier,” the report stated.
Despite proposed legislation to restrict congressional stock trading, none has passed, leading to suggestions for constitutionally imposed term limits and a strict ban on officials enriching themselves during their time in office.
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