The insider trading of politicians

For years, members of the U.S congress have been trading on insider information. As a key figure in Congress, Nancy Pelosi has been at the center of this with suspicious trades that made a reported 95% return in 2024, adding to her $240 million net worth.

This week, we dive into the controversy surrounding Nancy Pelosi’s stock trades and the broader implications for insider trading rules in Washington:

• 💼 The insider trading of U.S politicians

• 🏦 Pelosi's trading track record and controversy

• 📉 How politicians are getting away with this

— Investor Briefcase Team

For years, members of Congress have been called out for trading stocks in industries they regulate, often with suspiciously good timing. A 2022 analysis found that nearly 100 lawmakers made trades tied to sectors directly influenced by their committee work, from tech to defense to healthcare. In many cases, these trades occurred just 24 hours before stock prices surged following public news of policy changes they helped enact.

The 2012 STOCK Act was meant to curb insider trading in Congress by requiring lawmakers to disclose trades over $1,000 within 45 days. However, enforcement is notoriously weak. Fines for late filings are just $200, and nearly half of those accused of insider trading have violated the law without consequences, allowing politicians to trade on insider information without consequence.

When it comes to insider trading, few names in Congress attract more attention than Nancy Pelosi. Her portfolio, managed by her husband, Paul, has reportedly delivered average annual returns exceeding 50%. Many of these trades are strikingly well-timed, occurring just before key congressional rulings that significantly impact the stock prices of specific companies.

In 2024, Pelosi’s portfolio delivered a 95% return, led by investments in Nvidia. Paul Pelosi purchased millions in Nvidia stock just weeks before Congress passed a $52 billion semiconductor funding bill. After the bill’s passage, Nvidia’s stock soared, adding millions to the Pelosi net worth that is already close to a quarter billion dollars.

Her defenders argue that her trades are properly disclosed and legal under current rules. Critics, however, point to repeated instances of trades that align closely with her legislative work, calling it a conflict of interest.

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Congress has little incentive to police itself. The STOCK Act requires lawmakers to disclose trades, but enforcement is lax, and penalties are trivial. The rules allow lawmakers and their families to continue trading stocks in industries they influence, creating an environment more corrupt than that of Wall Street.

Efforts to ban lawmakers from trading stocks have surfaced repeatedly, with proposals for blind trusts or full divestment gaining support from reform advocates. But those efforts continue to hit roadblocks by the same Congress members voting against them.

For investors, this ongoing controversy serves as a reminder to pay close attention to Washington. Policy decisions often precede significant moves in key industries, creating opportunities for those who know where to look, or for those simply following the trades made by Nancy Pelosi.

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The insider trades of Congress members

> Richard Burr: The former senator faced scrutiny for selling up to $1.7 million in stocks after a private COVID-19 briefing, just before markets declined.

> Kelly Loeffler: The former senator and her husband sold millions in stocks following a confidential Senate health committee meeting about COVID-19.

> Dianne Feinstein: The senator was questioned after her husband sold biotech stocks following a classified Senate briefing on the pandemic.

> Jim Inhofe: The senator sold significant stock holdings following early coronavirus briefings, prompting concerns about the timing of these transactions.

Each week we profile the most notorious investment stories.

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