Senators strike bipartisan deal for ban on stock trading by members of Congress
cnbc.com
cnbc.com
As an aside: this post is not meant as a partisan criticism. I don't invest in the Republican equivalent $KRUZ because last time I checked it wasn't doing as well as $NANC.
It would be fun to compare the two parties portfolios. Are there ideological companies which are helping/hurting the overall performance? One group is better at timing?
For example, Senator buys a stock, stock jumps and plateaus a week later, buy is reported a month later would mean don’t add this to ETF.
[1] https://ethics.house.gov/sites/ethics.house.gov/files/docume...
Now I have to decide if their hot tip hit or not. Was it a long term play? Does the committee decision get published in five weeks, so they wanted to move now?
I am sure there is signal worth exploiting, but an index fund still seems the more appropriate strategy without significant development on how to follow their moves.
Edit: It might just be better to buy a NASDAQ index fund. NANC expense ratio is 0.75%, double that of most index funds. Then again NANC doesn't have as much history.
It's not hard to be a sophisticated investor when your spouse is one of the decision-makers influencing major stock movements - a la CHIPS Act.
It would be naïve to believe spouses never discuss pending legislation that might financially benefit them both.
So sophisticated on its own doesn’t imply consistently outperforming the market. It does imply variance and thus windows where they will outperform the market even if they preform poorly long term.
Her recent returns are high, but they’re right up there with several other Republican and Democrat lawmakers: https://x.com/unusual_whales/status/1742207287966777673
It’s even stranger that inception date of the $NANC ETF was after she announced she was stepping down as Democratic Party leader.
I guess the name triggers controversy, so the people pushing these products use whatever sells.
> when asked whether lawmakers and their spouses should be prohibited from trading stock while in Congress, Pelosi said, “No,” adding that “this is a free market.”
https://apnews.com/article/business-nancy-pelosi-congress-86...
It's also because her family profits disproportionately:
> Pelosi's husband, investor Paul Pelosi, frequently trades significant numbers of stocks. With her husband's assets considered, Pelosi ranks among the wealthiest members of Congress, an Insider analysis found.
https://www.businessinsider.com/we-are-free-market-economy-p...
https://www.fa-mag.com/news/how-to-invest-like-members-of-co... Per this, KRUZ is lagging the S&P 500 YTD.
And in fact the case it makes is actually less convincing? "In total, 37 members of Congress beat the S&P 500 in 2023, according to stock and options data company Unusual Whales." 37 members of congress is a small subset.
Most of the returns for both are from $NVDA, which is up 172% YTD.
If you check S.1171 you can see it is in the Committee on Homeland Security and Government Affairs. It may die there if nothing else happens.
If you think this is an important bill, you can contact the members of this committee. They are listed here: https://www.hsgac.senate.gov/about/committee-members/
You should inform them that this is important to you, and if they don’t take action on this you will not vote for them or donate to their campaigns, and will support their opponent instead.
This last bit is controversial but important. Politicians care about staying in office. If you will be supporting a candidate regardless, your opinion doesn’t matter to them. So you need to tie their election to something that matters to you.
How to sidestep this ban? Setup an anonymous trust or holding company in Wyoming or overseas.
It's possible to make it very difficult to prove who ultimately controls the company.
Obscuring ownership and control can be done perfectly legal.
Assuming you aren't sanctioned.
"Obscuring ownership and control can be done perfectly legal."
Exception the tax fraud part...
What I care about is that if congresspeople can trade at all, they have a conflict of interest in doing their legislative duties. They are incentivized to pass laws that will benefit corporations and make the stock market rise. That's what is unacceptable about Congress trading.
Banning trading totally is the only thing that matters.
Inside trading is already notionally illegal, isn't it?
Why would this law be trying to re-make insider trading illegal?
There's plenty of stories of well-connected people frontrunning government endeavors that require lots of land. Sometimes that has positive results: civic minded person buys up land without raising eyebrows, then sells it to government for a song; sometimes it's negative: less civic minded person buys up land and then sells it to government or others for much more than they purchased it for, in large part because of official decisions they participated in.
I know some states have part time legislatures, so the members often have other jobs, but a federal office is a full time job, year round, regardless of recesses. I don't think it's unreasonable to demand that office holders avoid potential conflicts of interest by avoiding any sort of investment outside of personal residences and well diversified mutual funds (and well diversified ETFs). Plus or minus rental housing owned prior to office.
It's not that big of an imposition, unless your spouse is an active stock trader (for work or hobby), but in that case... Sometimes you have to make sacrifices for a spouse's career.
Let's say the buy up a lot of houses before passing new regulation that specifically makes those properties increase dramatically in value. I'd argue that is insider trading in spirit, despite those properties not being covered securities. Similar for policy that might substantially impact crypto, Art, etc... There are endless ways to leverege their power and inside knowledge for personal gain. With securities trading it's at least possible for retail investors to ride along, buying up $NANC or mimic'ing specific traders and trades.
I heard an interesting proposal to have a bill that grandfathers in sitting members of congress. That way they get credit for changing the system but they don't lose the benefits themselves. It's ugly but it's more likely to eventually get the job done.
It's the same deal with supreme court. They call the shots in between the lines.
Obviously some of this will depend on how the legislation is drafted, but there's a difference between whether those actions shield you from prosecution or if they just make it harder to detect.
Most likely those sidesteps will be seen for what they are, and when prosecutors become aware of them they will still investigate and prosecute for violating the statute. Under current law there are members of Congress that have been plainly guilty of insider trading and yet prosecutors have declined to prosecute (the article mentions this explicitly for COVID-19 insider trading). It is entirely possible that there will be a lack of prosecutorial enthusiasm, but hopefully this will have a chilling effect on some of the most flagrant cases (cough Pelosi).
I don't know why anyone is talking about insider trading. I don't give a shit if the congresspeople do insider trading.
What I care about is that if congresspeople can trade at all, they have a conflict of interest in doing their legislative duties. They are incentivized to pass laws that will benefit corporations and make the stock market rise. That's what is unacceptable about Congress trading.
Banning trading totally is the only thing that matters.
this headline sounds nice
where’s the nefarious angle?
This "bipartisan deal" is a bunch of Senators. It still hasn't passed the Senate, much less gone to the House, much-much-less gotten wrangled in reconciliation.
There's a possibility it'll be picked up and actually worked on during the "lame duck" session after the election. But most likely, this is the last you'll ever hear of it. Unless you live in one of their states, and you go to a campaign rally, where they tell you about the great thing they're working on.
The SEC also requires that "insiders" make certain filings well in advance of trading stocks, but that is a separate issue.
I'm not aware of any successful prosecutions for insider trading for members of Congress; the article does mention the FBI's investigations in the wake of COVID-19 that ended with prosecutors declining to make any charges.