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The ability of members of U.S. Congress to buy and sell stocks has been controversial over the years. One of its most prominent members made some purchases in December that could benefit from the new Biden administration.
What Happened: It was revealed over the weekend that Speaker of the House and California Rep. Nancy Pelosi purchased 25 call options of Tesla Inc. The purchases could have been done by Pelosi or her husband Paul, who runs a venture capital firm. The options were bought at a stake price of $500 and expiration of March 18, 2022. Pelosi paid between $500,000 and$1,000,000 for the options, according to the disclosure.
Tesla shares have risen from $640.34 at the time the calls were purchased to over $890 today. The call options were valued at $1.12 million as of Monday. The purchases by Pelosi are questionable as arguments could be made that the companies stand to benefit from new President Joe Biden’s agenda.
Biden’s push for electric vehicles, which could include lifting the cap on sales, would give buyers tax credits again and is advantageous for Tesla. The president has also suggested a possible cash-for-clunkers program that could incentivize customers for trading in used vehicles towards the purchase of an electric vehicle. Pelosi could now have a conflict as she works to pass clean energy initiatives from which her family could profit.
Former U.S. Senator David Perdue, a Republican, was criticized for making numerous stock trades during his six years in Congress. Perdue was the most prominent stock trader from Congress, making 2,596 trades during his time served. Some of Perdue’s transactions came while he was a member of several sub-committees. The Justice Department investigated Perdue and found no wrongdoing.
What’s Next: It’s legal for members of Congress and their spouses to own stocks. The transactions have to be disclosed per the STOCK (Stop Trading on Congressional Knowledge) Act that was passed in 2012.U.S. Senator Jeff Merkley of Oregon is one member of Congress who has co-sponsored legislation to ban the adding of individual stocks by members of Congress. Both Merkley and Pelosi are Democrats.
Pelosi’s transactions could push for more regulations concerning stock purchases by members of Congress.
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