Nancy Pelosi Wants To Be NYSE Floor Director for Congress

Pelosi under fire for ‘disgusting’ defense of members trading stocks

DEC 16, 2021 | REPUBLISHED BY LIT: DEC 17, 2021

WASHINGTON (TND) — House Speaker Nancy Pelosi, D-Calif., drew blowback from progressives and government ethics watchdogs Wednesday after defending the right of members of Congress to trade individual stocks amid deepening concerns about corruption and insider trading.

“We are a free-market economy,” Pelosi said at a news conference. “They should be allowed to participate in that.”

Many on the left who were already frustrated with Democratic leadership for a failure to advance their top priorities lashed out at the speaker on social media. Alongside struggles to extend the enhanced child tax credit and forgive student loan debt, they warned an open embrace of members freely trading stocks could dampen enthusiasm among the party’s base.

pic.twitter.com/DjgIYVgQvm

— Walter Shaub (@waltshaub) December 16, 2021

“This is so bad,” MSNBC host Chris Hayes said of Pelosi’s response. “Totally indefensible on the substance and the politics.”Walter Shaub, who served as director of the Office of Government Ethics under former President Barack Obama, called Pelosi’s remarks “disgusting.” He argued lawmakers can participate in the free-market economy by investing in diversified mutual funds or government bonds without raising potential conflicts of interest.

“Nobody kidnapped these members of Congress when they were private citizens, dragged them to Washington and forced them to be in Congress,” Shaub told Fox News. “The American people are sick of members of Congress buying and selling stock and creating the appearance of trading on insider information.”

Under the STOCK Act of 2012, members of Congress and their employees are barred from using any nonpublic information derived from their position for personal benefit. The law also requires them to promptly file public disclosures of financial transactions involving stocks, bonds, and securities.

No. It cannot be a perk of the job for Members to trade on access to information.

That’s why I introduced the bipartisan TRUST in Congress Act — requiring elected officials and their families to place assets in a blind trust to prevent them from profiting off their positions. https://t.co/CTSoa8sHDZ

— Rep. Abigail Spanberger (@RepSpanberger) December 16, 2021

Pelosi cited that law as a sufficient deterrent to malfeasance Wednesday, but nobody has ever been prosecuted under it. It also does not appear to have stopped lawmakers from making numerous dubious trades, in some cases involving industries over which they have direct oversight.

Progressives have recently amplified calls to go further and ban members of Congress and their families from trading stocks at all. Rep. Alexandria Ocasio-Cortez, D-N.Y., said last week it is “absolutely ludicrous” that such transactions are allowed while members are in office.

“The access and influence we have should be exercised for the public interest, not our profit,” Ocasio-Cortez tweeted. “It shouldn’t be legal for us to trade individual stock with the info we have.”

Sen. Elizabeth Warren, D-Mass., has repeatedly introduced legislation that would prohibit members of Congress and White House staff from owning individual stocks. Earlier this year, Sen. Jeff Merkley, D-Ore., and over a dozen bipartisan co-sponsors in the House and Senate proposed a similar bill, but it has not yet received a hearing or a vote.

It is absolutely ludicrous that members of Congress can hold and trade individual stock while in office.

The access and influence we have should be exercised for the public interest, not our profit. It shouldn’t be legal for us to trade individual stock with the info we have. https://t.co/Z3UZej2eC2

— Alexandria Ocasio-Cortez (@AOC) December 8, 2021

Congress has been quick to support restrictions on trading for others in positions of power, such as federal judges and Federal Reserve officials, when questions about conflicts of interest emerged. Convincing them to police themselves more aggressively has proven challenging for ethics advocates.

Daniel Feldman, a former New York state legislator who teaches ethics and accountability at John Jay College of Criminal Justice, said lawmakers trading stocks is far from the most pressing threat to American democracy at the moment. The potential for profiting off insider information is troubling, though, and he would not oppose placing more limits on it.

“Members of Congress should not be doing anything further to destroy public trust in our institutions,” Feldman said.

An Insider investigation published Wednesday found at least 49 members of Congress and 182 high-paid staffers filed disclosures late in the last two years, and there is no public record of whether they paid the fines required for late filing under the STOCK Act. The lack of a transparent enforcement mechanism makes it hard to judge how effective the law has been.

Insider also found dozens of lawmakers held and traded shares in drug companies producing COVID-19 vaccines and treatments during the pandemic. Many members defended those holdings by arguing that they complied with ethics rules or that their financial dealings were handled by independent advisers.

However, allegations of insider trading have swirled around several members for transactions conducted in the early days of the COVID-19 pandemic. None have been formally accused of wrongdoing, but Sen. Richard Burr, R-N.C., remains under investigation by the Securities and Exchange Commission for trades he and his brother-in-law made in early 2020.

Such cases can be difficult to prosecute because they often hinge on proving what someone knew or what they were thinking when they made a trade. In 2019, Rep. Chris Collins, R-N.Y., pleaded guilty to charges that he tipped off his son about nonpublic information about a pharmaceutical company, but he was later pardoned by then-President Donald Trump.

Despite the shortcomings in the STOCK Act, Feldman stressed it is not entirely toothless. As evidenced by the Insider analysis, requiring members to report their trades creates a mechanism for political accountability, and opponents and the media can press them to answer publicly for any questionable conduct.

“As with most things, perfect solutions will evade us,” he said.

Feldman – who recalled filling out extensive financial disclosure paperwork in the New York Legislature – also cautioned against placing too many onerous financial restrictions on members of Congress, particularly the less wealthy ones who might need their stock income. Corrupt politicians will likely find ways around any rules lawmakers impose anyway, so it is important to ensure public service remains attractive and affordable to people of integrity.

“Legislators are citizens too,” he said. “There should be some limits on the demands we place on them.”