Nancy Pelosi made some stock purchases last month that are raising eyebrows — and questions — about the ethics of Congresspeople buying and selling stocks. In December, Rep. Pelosi, the Speaker of the House, purchased 25 call options of Tesla stocks, along with a few other stock purchases. Why does this matter? Because under the Biden administration’s new agenda, with its focus on environmental protections and combating climate change, Pelosi could benefit financially from those political plans.
President Joe Biden is currently encouraging the purchase of electric vehicles, and that could mean lifting the cap on sales, providing tax credits to buyers, and a potential program incentivizing people to trade in used vehicles to buy an electric one. Biden also announced on Monday that he would be replacing the entire fleet of 645,000 federal vehicles with electric ones. This could create a conflict of interest, as part of Pelosi’s job will include working to pass these environmental and clean energy initiatives — initiatives from which her family now stands to profit handsomely.
According to the disclosure, Pelosi (or her husband, Paul, who runs a venture capital firm) purchased call options at a stake price of $500. Since the calls were bought last month, shares of Tesla have risen from $640.34 to over $890. The call options are now valued at $1.12; they were purchased for between $500,000 and $1 million.
Questions of whether it’s ethical for members of Congress to buy and sell stock are not new. Last year, former Georgia Senator Kelly Loeffler was accused of insider trading and profiting off the coronavirus pandemic when she sold between $1.275 million and $3.1 million in stocks right after being briefed in January 2020 about the seriousness of the virus. In June of 2020, the investigation was dismissed by a Senate ethics panel. And since then, Loeffler lost her seat in the Senate to Democrat Raphael Warnock.
Another former Georgia Senator, David Perdue, was also criticized for potentially unethical stock purchases during the six years he spent in Congress. The Republican was investigated by the Justice Department for his stock market activity, though no wrongdoing was found (he, too, lost his recent re-election campaign to a Democrat, Jon Ossoff).
In the past, there has been legislation aimed at combating this. The STOCK Act, passed after the 2008 financial crisis, attempted to stop insider trading by making it illegal for government officials to trade stocks after receiving material or nonpublic information “derived” from their jobs, or information that they received while performing their jobs. In light of the Loeffler and Perdue activity, that bill has been re-examined and some people have argued it did not go far enough.
“Given that Congress’ first obligation is to the American people and that serving that obligation so often requires having more knowledge than ordinary American investors, why should members of Congress be permitted to trade individual stocks at all?” Tyler Gellasch, a former Senate staffer who helped draft the STOCK Act, wrote last year in a piece for Politico. “Why should we expect them to even be capable when making business decisions of separating what they know as a result of their governmental job and what they might otherwise know as private individuals?”
Other lawmakers agree, including Sens. Elizabeth Warren and Jeff Merkley. Currently, there is proposed legislation that would ban individual stock purchases by members of Congress. “After nearly four years of the most corrupt president in American history and with U.S. senators brazenly trading stocks to profit off a raging pandemic, the Anti-Corruption and Public Integrity Act is more urgent than ever,” Warren and other lawmakers said in a joint statement.