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> For example, Pelosi in Dec 22 was against more stimulus. Her husband buys deep ITM TSLA and AAPL calls that day. December 23rd, she is suddenly for stimulus a

> For example, Pelosi in Dec 22 was against more stimulus. Her husband buys deep ITM TSLA and AAPL calls that day. December 23rd, she is suddenly for stimulus again, with those same companies ralling 5%, giving her an instant +30 return. > Congressman Gottheimer is absolutely an incredible options trader. He’s been selling calls at peaks on $MSFT all 2021, & seemingly buying back the contracts on dips. This in blocks of $250,000 - $5,000,000, which is incredible size given the amount of $MSFT shares he owns. For ex, on 02-12 he sold 500k $MSFT $160 strike expiring 06/18/2021. On that same day, he bought deep ITM calls of $1M-5M at $145 expiring 03/19/2021. The whale caught both of his movements as well. This is fucking unreal.

gadders 6y ago
I don't know if specific trades are sketchy or legit, but I do think there should be some sort of log of net worth when you join congress, senate, houses of parliament etc and politicians be expected to explain any large gains over their time in office.
- deleted 6y ago
  [deleted]
- chrisbolt 6y ago
  Like https://www.opensecrets.org/personal-finances https://www.opensecrets.org/personal-finances ?
- giantg2 6y ago
  Frankly, it's insider trading and should be restricted/prosecuted as such.
  - fighterpilot 6y ago
    There will almost always be plausible deniability. Needs to be banned.
    - giantg2 6y ago
      I think the insider trading laws don't require motive - just that they had private information or used their position of influence and that they benefited from a related trade. The rules for executives at companies usually requires them to file any trade plans related to their company stock prior to actually making the trade, which would at least prevent the short term plays like the Pelosi example. Even tech people at trading companies are subject to restrictions in what they can trade, even if they aren't looking at the financial data.
      - JumpCrisscross 6y ago
        Stupid insider trading, where someone gets a tip and then trades on it, is well enforced. It's easy to catch ex post facto and the people doing it are generally of the mind that everyone is insider trading and so they're unlikely to get caught. The problem is in the grey areas. Take the Pelosi example. The material nonpublic information was her personal policy position. Assuming she acted purely venally, are your own intentions insider information? If I know I'm going to get Chipotle for lunch tomorrow, is it insider trading to buy Chipotle shares? If, on the other hand, her husband took a conversation he had with her about policy and then traded on it, that would be insider trading. Unless they did it over text message, however, the odds of proving it are zilch.
        fighterpilot 6y ago
        Regarding the Pelosi example, it's even worse than what was suggested above. The TSLA trade was placed a few days before Biden came out and said they planned to buy EVs for government vehicles, which was an announcement that directly caused TSLA to spike up the second it was broadcast to the market. Again though there's plausible deniability, as you say. It needs to just be outright banned.
        giantg2 6y ago
        "personal policy position" Once she announces it in the media, wouldn't it be a professional policy opinion? CEOs are similar. They can believe what they want, but what they say to the media can be punished (like Elon was). The real sticking point is how is she of one opinion then flip to the complete opposite the next day without giving a reason. If they have to report their intended trades then it could avoid this short term play. Spouses and household members are held to the same restrictions as the regulated individual, regardless of the conversation or not. The only reason it's hard to prove is because they are in a position of power. The SEC would jump on any normal people doing the same thing.
  - tgb 6y ago
    I think the insider trading aspects of this are the lesser concern. There's substantial debate over whether insider trading is actually a net negative for society or whether it makes sense to regulate, surprisingly. [1] The primary concern here is whether or not this influences their decisions when it comes to governing, whether they choose the option that is most profitable rather than best for their country. [1] https://en.wikipedia.org/wiki/Insider_trading#Arguments_for_legalizing https://en.wikipedia.org/wiki/Insider_trading#Arguments_for_...
- chris11 6y ago
  My employer has 105b plans available if you want to trade outside of trading windows. I think we should have something like that for politicians. Insider trading would be less of an issue if politicians and spouses were required to publicly announce trades 30-90 days before they were made. I don't think that would impact long term trading strategies, and I think it's reasonable to ask politicians to give up short term trading.
  - gadders 6y ago
    I know that in the front office in certain investment banks, you're not allowed to trade single stocks for your own account. You can only trade funds. I think a similar rule here might work.
koube 6y ago
Dec 22 democrats had reached an agreement to provide $600 in stimulus, this was an agreement that had buy in and should have been pushed forward. Dec 23 Trump announced support for a $2000 stimulus, changing the political calculus, in favor of democrats, who did eventually push through the remaining $1400 in a separate package. Pelosi's strategic change is not a change that happened in a vacuum. Trump's announcement was all over the news and was the single most important event in the political world that day, not Pelosi's husband buying calls. Contextualizing this event around Pelosi's husband is misleading. Ok downvote my comment all you want but this is well documented and was less than 6 months ago, and frankly it's surprising that people forgot how impactful this event was. People are still criticizing Biden over the additional check being 1400 instead of 2000.
- lordnacho 6y ago
  As a member of Congress she has much better colour on what's about to happen than everyone else. She can basically count up the votes before before anyone else. I'd rather live in a world where reps are squeaky clean. It's much better than one where we make up some rules where people who come right up to the line end up smelling bad, and then everyone is born complaining about the corruption and enduring it with no recourse. Ultimately it's a rules vs discretion (aka judgement) question.
  - koube 6y ago
    Ok yes she did count the votes, determine that this was the highest number that could be negotiated, and then she worked to push the bill forward as she should have. And then the president tweeted out of nowhere which changed things. Trump's unpredictability is well known for anyone who has read the news at least once in the past five years. All of this is above board. What do you want her to do? Forget all of her policy goals and act against all of her stated interests because her husband bought calls the previous day? I don't know if you remember, but the amount of stimulus remained 600, so Pelosi was on money on what was politically possible. The remaining 1400 only was possible after the slimmest of senate majorities after the Georgia runoffs.
mattferderer 6y ago
I would like more oversight here but I don't know if these are great examples. I do (without evidence) believe a lot of these people use insider information. Pelosi's husband has been very bullish for a long time on Tesla, Apple & tech in general I do believe. Gottheimer did what I think is a Bull Call spread which means in February, after a crazy run up in market prices in January, he bet that MSFT would go up a little more but would eventually come back down or at least trade sideways & not go over $160 by 6/18. If he sold his ITM calls before March or in early March, he probably did good. If he held on to them until closer to the 19th, he might have got crushed. This doesn't say when he sold. A lot of people argued stocks were overbought after January. Also, if he owns a large share of MSFT it's common to sell calls when you want to keep your shares but think the price is at the top or there is a lot of volatility that will soon go away. It's a way to earn some income without selling. - None of this is financial advice & I'm fairly ignorant on this topic.
- Joker_vD 6y ago
  Well, when the order of events is "A committee which Pelosi is member of is discussing the large contract on the VR helmets for the military — Pelosi's husband buys MSFT — The committee anounces that the contract goes to MSFT — MSFT stock rises", and the pattern keeps repeating, it is evidence, albeit circumstantial.
  - throwaway5752 6y ago
    Seriously, I am very serious about preventing conflicts of interest and insider trading. But Microsoft is a terrible example, they are extremely diversified. The contract was announced 3/31 and it's obvious that it had no particular impact on its share price since that date when looking at its peers: https://www.google.com/finance/quote/MSFT:NASDAQ?comparison=NASDAQ%3AGOOGL%2CNASDAQ%3AAAPL%2CNASDAQ%3AAMZN&window=1M https://www.google.com/finance/quote/MSFT:NASDAQ?comparison=...
    - pc86 6y ago
      It went from approximately $235 to $250, which is about 6%. On calls, especially short-dated ones, that can easily be a 40-50% gain. I've got a number of different MSFT LEAPS in my portfolio and they all went up 15%+ on that news.
api 6y ago
The fact that high-ranking politicians and bureaucrats can trade stocks at all is criminal. The moral hazard is unbelievable.
- skohan 6y ago
  Yes it's the definition of conflict of interest. It's insane that this is allowed
  - sneak 6y ago
    I think it's working as intended and that it's insane that people are surprised it's set up this way. The state and large corporate interests in the USA are very tightly integrated and have been for at least an entire generation.
    - skohan 6y ago
      But this is so cynical. Not to be naive, but if we can't at least start from the framework that the government should serve primarily the interests of the people and be outraged when it doesn't, then the American project is pretty much over
      - sneak 6y ago
        I'm not sure that has ever been true, or ever been the goal. The American government does serve the interests of the American people: the American people who own the bulk of the land and the largest companies. George Washington was the largest landowner in the colonies when the revolution started.
        hpkuarg 6y ago
        But Washington also shocked the ruling elites of the world by stepping down when he did. Clearly, he was cut of a different cloth than other largest landowners in their respective countries.
        6y ago
wpietri 6y ago
Whatever the behind-the-scenes truth, I think the appearance of conflicting interests is a problem regardless. For a lot of elected offices and high public service positions, I think their wealth should be put into a blind trust, one constrained by law to buy broad, boring things like index funds. That would surely be a problem for some individuals. But I don't think it's a systemic problem. We only need to find 0.00013% of the US population to fill the Senate and House together; surely there are that many people who are both competent and willing to put the public interest ahead of their own.
- sneak 6y ago
  I think this presupposes the lie that the government is by, of, or for the (majority of the) people. This is a closed system, and most are not allowed anywhere near the control room. It, including these trades, is working as intended.
  - smt88 6y ago
    The US is explicitly not about the majority. The Senate and Presidency are both anti-democratic institions where land controls votes.
  - munk-a 6y ago
    > It, including these trades, is working as intended. You can view the US in a lot of cynical ways but it was not created as a vehicle to allow the wealthy to continue to gain wealth at the expense of the poor. Insider trading between congressmen using their posts to fleece the public was never an intent of the government.
    - jhallenworld 6y ago
      It was at least created for them to at least preserve their wealth. In the debates leading up the creation of the Senate, here is a typical argument: "...our government ought to secure the permanent interests of the country against innovation. Landholders ought to have a share in the government, to support these invaluable interests and to balance and check the other. They ought to be so constituted as to protect the minority of the opulent against the majority. The senate, therefore, ought to be this body; and to answer these purposes, they ought to have permanency and stability. Various have been the propositions; but my opinion is, the longer they continue in office, the better will these views be answered" https://founders.archives.gov/documents/Madison/01-10-02-0044 https://founders.archives.gov/documents/Madison/01-10-02-004...
yumraj 6y ago
I'm curious if any of this falls under the definition of insider trading. It should, but I think it doesn't and which is why SEC doesn't get involved in these. Does anyone know?
- freeone3000 6y ago
  For a long time, Congress had an exemption to insider trading. They no longer do, but, insider trading still requires material non-public information about the company in question -- and Congressional acts are the most public thing possible. Betting that a company's stock will go up (or down) and then making it happen after you make the bet isn't insider trading, it's activist investing, and is totally legal.
  - YinglingLight 6y ago
    >Congressional acts are the most public thing possible Not when said action occurs a week before the Congressional act is announced. Is this HN thread flooded with bots or something? Have never seen this level of sympathy for politicians.
    - sneak 6y ago
      What they said was objectively true, regardless of your opinions for or against the situation.
      - devmor 6y ago
        No, it was not true. It was predicated on the falsehood that congressional acts are announced as they are decided.
      - LanceH 6y ago
        The current count for who has pledged to vote for what is highly relevant and private information.
  - skohan 6y ago
stereolambda 6y ago
Please correct me, but here's a provocative hypothesis I spent three minutes thinking through. Couldn't you say that speculating with insider information on public markets can be a way for public officials to make a lot of money without marrying themselves to any particular interests? In that case, couldn't it be potentially a mechanism we can exploit for good? Disclaimer: not American, no strong opinion on these people.
- jliptzin 6y ago
  Your hypothesis assumes that all elected officials must engage in some form of bribery or pay for play. In an ideal world we’d find leaders who put the interests of the country ahead of their finances.
  - Tenoke 6y ago
    Or alternatively we can just pay them a lot more since they'll make money anyway, disallow them from earning money in other ways and at least have their profits have no additional negative effects. Not that I expect people would be comfortable paying politicians more (see how many complain about e.g. CEO pay) so I guess we are stuck with incentives for corruption instead.
    - kennywinker 6y ago
      I don't think we need to PAY them more to eliminate corruption - I think we need to change how campaigns are financed. Needing to raise millions every few years to keep your job makes you beholding to whoever has the money
- jlarocco 6y ago
  I guess I don't see where the "good" is there? Being a representative isn't supposed to be a "get rich quick" scheme. They already make a lot of money and IMO if they're going to invest in stocks they should play by the same rules as everybody else. Edit: On second thought, considering how much they can influence stock prices, maybe they should have stricter insider information regulations. It's a huge conflict of interest.
ABeeSea 6y ago
> Pelosi in Dec 22 was against more stimulus. This is not true. It’s very odd to see the kind of right-wing conspiracies based on outright fabrications spread on HN as literal truths. Here is an article from December 22 were Pelosi is calling for more stimulus: www.cnbc.com/amp/2020/12/22/trump-calls-covid-relief-bill-unsuitable-and-demands-congress-add-higher-stimulus-payments.html Here is her direct tweet dated 12/22: https://mobile.twitter.com/SpeakerPelosi/status/1341557535732604935 https://mobile.twitter.com/SpeakerPelosi/status/134155753573...? Edit: There are outright lies in the source article. Sad day for HN that the lies are getting so much traction and fact checking with 1st hand sources is getting downvoted.
- seriousquestion 6y ago
  People are confused about this because Pelosi rejected the stimulus in October, prior to the election. She didn't accept until December, post election. Some democrats were urging her to accept it in October: https://twitter.com/AndrewYang/status/1315078896853843970 https://twitter.com/AndrewYang/status/1315078896853843970
  - ABeeSea 6y ago
    That’s not what the business insider linked in the tweet says. It says she described the White House plan as “insufficient” meaning there wasn’t enough stimulus in it. How can criticizing a bill for not having enough stimulus mean you are against stimulus? The House had passed the HEROES act for additional stimulus in May 2020. The Republican senate refused to even put it up for a vote. She was always for passing of the HEROES act even during this October - December period. She was always pro stimulus.
    - jfk13 6y ago
      > the HEROES act Does anyone else cringe at this American obsession with naming acts of congress so as to create "inspirational" acronyms?
      - 6y ago
akudha 6y ago
Isn't Pelosi worth like 100 million or something? How much money is enough for these people? :( How quickly are these trades made public? Maybe we should just copy the congress people's trades and make some profit ourselves :P
- kennywinker 6y ago
  Well, according to the US supreme court, money is speech - so more money more voice. As a concrete example, trump backed his own campaign to the tune of ~$66mil. Without it, I'm not sure he would have gotten as far as he did. (I'm not endorsing this, I'm just saying these are the rules of the game that's been set up) And to answer your second question - not quick enough for the public to act on it.
- frockington1 6y ago
  Clearance time varies but can take months. They've already collected profits by the time they are disclosed
- eloff 6y ago
  > How much money is enough for these people? :( What kind of attitude is that? If you have savings, one seeks a return on said savings by investing them. That's perfectly normal and rational behavior at all wealth levels.
  - gowld 6y ago
    "normal and rational" is different from "ethical or moral". "All wealth levels" are not the same.
    - tastyfreeze 6y ago
      It is not immoral or unethical for somebody to have or earn more money than another. All people try to increase their wealth however they can. At lower income levels that is very difficult but the behavior is the same.
    - eloff 6y ago
gexla 6y ago
Pelosi is a master politician and the pandemic has been a fast moving situation. I could see Pelosi being against the stimulus and then fast switching based on changing currents in the minds of voters.
- itsoktocry 6y ago
  Great. Why does she have to buy shares in companies that align with her "switching"?
SilasX 6y ago
>Her husband buys deep ITM TSLA and AAPL calls that day. Stupid question: if you were expecting an upswing in a stock, wouldn't you get the most returns from an out of the money option? For a deep ITM you're paying the same as the underlying stock plus a tiny premium -- you might as well just buy the stock.
- ABeeSea 6y ago
  A large swing increases the IV which increases the premium (since the stock is now more likely to swing back down). Also decreases the risk in case the trade moves against you.
  - SilasX 6y ago
    But then you'd own the option so you'd benefit from the volatility and can quickly cash out, right?
    - ABeeSea 6y ago
      Yes, you cash out the options when the IV spikes when swings up.
      - SilasX 6y ago
        So, back to the original question: wouldn't OTM options make more sense in their position?
        ABeeSea 6y ago
        If the bet is wrong, OTM options expire worthless. ITM options give you less risk, but for a premium (you buy fewer contracts with the same amount of money). But still with more leverage than outright buying the stock. This is captured in the concept of Delta one of the “greeks” which is a parameter in the black scholes equation and solution that tries to measure the pricing movement of the option relative to the price movement of the stock. Owning stock has a delta of 1. ITM options have a delta closer to 1 but not exactly 1, OTM options have a delta closer to 0, but not exactly 0. ATM options of a delta around .5.
frankfrankfrank 6y ago
Re. the Gottheimer trading; if one is to believe the reports of his net worth based on public records [1][2], he supposedly almost tripled his wealth in just one year. That seems quite unusual. The fact that he appears to trade mostly $MSFT while also being a former MSFT Executive and seems to be extremely accurate in his options trading of that $MSFT, only really adds to the extreme suspiciousness. Is there no entity that even just tries to keep tabs on or possibly investigates these people, let alone charge them with crimes where appropriate? It seems that where there is smoke … and fire … there may actually be fire. [1] https://www.nj.com/politics/2019/07/the-richest-new-jersey-members-of-congress-ranked-theres-a-new-leader-this-year.html https://www.nj.com/politics/2019/07/the-richest-new-jersey-m... [2] https://finance.yahoo.com/news/richest-member-congress-state-170033867.html https://finance.yahoo.com/news/richest-member-congress-state...
- adamrezich 6y ago
  > Is there no entity that even just tries to keep tabs on or possibly investigates these people, let alone charge them with crimes where appropriate? well there's this thing called the IRS that seems to spend most of their time auditing random citizens when the numbers they submit on their tax forms doesn't match the numbers the IRS already calculated on their side. maybe we could streamline that absolutely ridiculous process & their efforts could be used elsewhere
  - pc86 6y ago
    This argument comes up a lot and it's an astounding oversimplification and gross misunderstanding of how taxes work in the US. The IRS does not know how much you owe until you file. They may have a rough approximation, but they absolutely don't know anything close enough to be able to bill you.
    - dbt00 6y ago
      If you only have W2 income and take the standard deduction, 99% of what you need to know they know. Only changes like new address, dependent, etc would really be relevant.
mdoms 6y ago
> This is fucking unreal. It's USA. Corruption is the norm.
tzs 6y ago
I don't know about the Gottheimer example, but their Pelosi example seems pretty far fetched. First of all, Congress passed a stimulus bill on Dec 21, the day before her husband bought those calls. Any 5% gain over the next couple of days or so is for more likely in response to that, and in anticipation of Trump signing the bill soon, than it due to Pelosi changing her mind about some possible future stimulus that hasn't even started being negotiated yet. Second, the 5% "rally" for AAPL only lasted a week. TSLA's rise lasted longer, but it was rising before this. The article doesn't say anything about whether or not they actually exercised their options to buy the stock, and then sold it to actually profit. If they didn't, then this "rally" had no real effect on them. Third, looking at other tech stocks, GOOG pretty much did nothing around or for a while after Dec 22. AMZN fell for a day or two, spiked up, came back to around what it was. FB was kind of like AMZN, but the spike was smaller and the fall was deeper. Looking beyond tech stocks, the Dow and the S&P 500 don't show anything happening around the time. Most things continued the trends they had been on before. That suggests that Pelosi's change of heart about possible future stimulus bills didn't have much effect on most stocks. So why did they buy AAPL and TSLA? Even if they thought there would be an effect and wanted to exploit it, buying TSLA to do so makes no sense. AAPL makes a little more sense, but not much. AMZN or some other company whose products people would actually likely spend stimulus money on would make more sense.
femiagbabiaka 6y ago
Oligarchy in the U.S. is giving my mother country (Nigeria) a run for its money.
- tomcam 6y ago
  Don't be silly. The U.S. is infinitely more corrupt than Nigeria. Forgive me, but there's just no comparison.
  - femiagbabiaka 6y ago
    hah! I am sympathetic -- the U.S. corruption is definitely more impactful to the world, and on a much greater scale. But it is also more covert and _usually_ doesn't creep into the level of person to person bribery in everyday interactions (IME).
pbreit 6y ago
There is zero reason for congresspersons to trade options or really even any individual stocks. The optics are horrific.
disgrunt 6y ago
Here's a recent Pelosi options trade with the Microsoft AR contract announcement. [0] [0]: https://www.thestreet.com/mishtalk/economics/nancy-pelosis-husband-uses-call-options-to-buy-microsoft-ahead-of-big-govt-contract https://www.thestreet.com/mishtalk/economics/nancy-pelosis-h...
jwilber 6y ago
Casually making millions, almost certainly illegally, while her district suffers as one of the nation’s most severe when it comes to income inequality. [0] Every day I become more and more convinced that all politicians are basically the same - chasing self-interests, power, and prestige. [0] https://www.ppic.org/publication/income-inequality-in-california/ https://www.ppic.org/publication/income-inequality-in-califo...
- ABeeSea 6y ago
  California has high inequality compared to other states because the rich people don’t want to live in those other states. It’s not like people are rushing to move to Mississippi or West Virginia. It’s easy to have low inequality when everyone is very poor like West Virginia.
- efnx 6y ago
  I think this is just one way in which many politicians are the same. This does not mean that they share all the same concerns or have the same plans for the country.
goatinaboat 6y ago
This is fucking unreal. How do you think so many people on government salaries become super rich, whilst supposedly working for the government?
mgraczyk 6y ago
Obviously having access to insider information and trading based on that information is not okay, but the specific trade called out here does not sound like the sort of thing a person would do if they had information about future movement of the underlying $MSFT. They traded deep ITM calls 4 months out for deeper ITM calls 1 month out. My guess is that this particular trade is part of a risk management strategy, not an adjustment based on insider information.
- IAmGraydon 6y ago
  Yeah that didn’t make sense to me either. It sounds like the author isn’t very knowledgeable about how options work.
IAmGraydon 6y ago
Yep. The very people we elected and who are supposed to answer to us are fleecing the American public. This needs to be investigated further by the SEC.
tootie 6y ago
Isn't that completely fake though? Pelosi was pushing stimulus for months. And the negotiations were all very public. Trump and McConnell were holding it up.
exabrial 6y ago
Wait until you see how much she got paid to build a few miles of railroad.
wdn 6y ago
Rules are for thy not for me. Congress insider trading is not new. Peter Schweitzer’s book “Throw all of them out” details them. The book was released in 2011. How is this an acceptable. Is politicians above the law?
vict7 6y ago
To provide an additional example. Unelected ex-senator Kelly Loeffler's husband is chairman of the New York Stock Exchange. She made trades using non-public information. How is this sort of conflict of interest legal? https://www.politifact.com/factchecks/2020/oct/31/raphael-warnock/fact-checking-raphael-warnocks-claim-georgia-sen-k/ https://www.politifact.com/factchecks/2020/oct/31/raphael-wa...
menomatter 6y ago
Is it possible to see how much has each member of congress profited/lost doing trading over time? We can build a tool like this right? As all the data in public?

gadders 6y ago

I don't know if specific trades are sketchy or legit, but I do think there should be some sort of log of net worth when you join congress, senate, houses of parliament etc and politicians be expected to explain any large gains over their time in office.

deleted 6y ago
[deleted]
chrisbolt 6y ago
Like https://www.opensecrets.org/personal-finances https://www.opensecrets.org/personal-finances ?
giantg2 6y ago
Frankly, it's insider trading and should be restricted/prosecuted as such.
- fighterpilot 6y ago
  There will almost always be plausible deniability. Needs to be banned.
  - giantg2 6y ago
    I think the insider trading laws don't require motive - just that they had private information or used their position of influence and that they benefited from a related trade. The rules for executives at companies usually requires them to file any trade plans related to their company stock prior to actually making the trade, which would at least prevent the short term plays like the Pelosi example. Even tech people at trading companies are subject to restrictions in what they can trade, even if they aren't looking at the financial data.
    - JumpCrisscross 6y ago
      Stupid insider trading, where someone gets a tip and then trades on it, is well enforced. It's easy to catch ex post facto and the people doing it are generally of the mind that everyone is insider trading and so they're unlikely to get caught. The problem is in the grey areas. Take the Pelosi example. The material nonpublic information was her personal policy position. Assuming she acted purely venally, are your own intentions insider information? If I know I'm going to get Chipotle for lunch tomorrow, is it insider trading to buy Chipotle shares? If, on the other hand, her husband took a conversation he had with her about policy and then traded on it, that would be insider trading. Unless they did it over text message, however, the odds of proving it are zilch.
      - fighterpilot 6y ago
        Regarding the Pelosi example, it's even worse than what was suggested above. The TSLA trade was placed a few days before Biden came out and said they planned to buy EVs for government vehicles, which was an announcement that directly caused TSLA to spike up the second it was broadcast to the market. Again though there's plausible deniability, as you say. It needs to just be outright banned.
      - giantg2 6y ago
        "personal policy position" Once she announces it in the media, wouldn't it be a professional policy opinion? CEOs are similar. They can believe what they want, but what they say to the media can be punished (like Elon was). The real sticking point is how is she of one opinion then flip to the complete opposite the next day without giving a reason. If they have to report their intended trades then it could avoid this short term play. Spouses and household members are held to the same restrictions as the regulated individual, regardless of the conversation or not. The only reason it's hard to prove is because they are in a position of power. The SEC would jump on any normal people doing the same thing.
- tgb 6y ago
  I think the insider trading aspects of this are the lesser concern. There's substantial debate over whether insider trading is actually a net negative for society or whether it makes sense to regulate, surprisingly. [1] The primary concern here is whether or not this influences their decisions when it comes to governing, whether they choose the option that is most profitable rather than best for their country. [1] https://en.wikipedia.org/wiki/Insider_trading#Arguments_for_legalizing https://en.wikipedia.org/wiki/Insider_trading#Arguments_for_...
chris11 6y ago
My employer has 105b plans available if you want to trade outside of trading windows. I think we should have something like that for politicians. Insider trading would be less of an issue if politicians and spouses were required to publicly announce trades 30-90 days before they were made. I don't think that would impact long term trading strategies, and I think it's reasonable to ask politicians to give up short term trading.
- gadders 6y ago
  I know that in the front office in certain investment banks, you're not allowed to trade single stocks for your own account. You can only trade funds. I think a similar rule here might work.

koube 6y ago

Dec 22 democrats had reached an agreement to provide $600 in stimulus, this was an agreement that had buy in and should have been pushed forward. Dec 23 Trump announced support for a $2000 stimulus, changing the political calculus, in favor of democrats, who did eventually push through the remaining $1400 in a separate package. Pelosi's strategic change is not a change that happened in a vacuum. Trump's announcement was all over the news and was the single most important event in the political world that day, not Pelosi's husband buying calls. Contextualizing this event around Pelosi's husband is misleading. Ok downvote my comment all you want but this is well documented and was less than 6 months ago, and frankly it's surprising that people forgot how impactful this event was. People are still criticizing Biden over the additional check being 1400 instead of 2000.

lordnacho 6y ago
As a member of Congress she has much better colour on what's about to happen than everyone else. She can basically count up the votes before before anyone else. I'd rather live in a world where reps are squeaky clean. It's much better than one where we make up some rules where people who come right up to the line end up smelling bad, and then everyone is born complaining about the corruption and enduring it with no recourse. Ultimately it's a rules vs discretion (aka judgement) question.
- koube 6y ago
  Ok yes she did count the votes, determine that this was the highest number that could be negotiated, and then she worked to push the bill forward as she should have. And then the president tweeted out of nowhere which changed things. Trump's unpredictability is well known for anyone who has read the news at least once in the past five years. All of this is above board. What do you want her to do? Forget all of her policy goals and act against all of her stated interests because her husband bought calls the previous day? I don't know if you remember, but the amount of stimulus remained 600, so Pelosi was on money on what was politically possible. The remaining 1400 only was possible after the slimmest of senate majorities after the Georgia runoffs.

mattferderer 6y ago

I would like more oversight here but I don't know if these are great examples. I do (without evidence) believe a lot of these people use insider information. Pelosi's husband has been very bullish for a long time on Tesla, Apple & tech in general I do believe. Gottheimer did what I think is a Bull Call spread which means in February, after a crazy run up in market prices in January, he bet that MSFT would go up a little more but would eventually come back down or at least trade sideways & not go over $160 by 6/18. If he sold his ITM calls before March or in early March, he probably did good. If he held on to them until closer to the 19th, he might have got crushed. This doesn't say when he sold. A lot of people argued stocks were overbought after January. Also, if he owns a large share of MSFT it's common to sell calls when you want to keep your shares but think the price is at the top or there is a lot of volatility that will soon go away. It's a way to earn some income without selling. - None of this is financial advice & I'm fairly ignorant on this topic.

Joker_vD 6y ago
Well, when the order of events is "A committee which Pelosi is member of is discussing the large contract on the VR helmets for the military — Pelosi's husband buys MSFT — The committee anounces that the contract goes to MSFT — MSFT stock rises", and the pattern keeps repeating, it is evidence, albeit circumstantial.
- throwaway5752 6y ago
  Seriously, I am very serious about preventing conflicts of interest and insider trading. But Microsoft is a terrible example, they are extremely diversified. The contract was announced 3/31 and it's obvious that it had no particular impact on its share price since that date when looking at its peers: https://www.google.com/finance/quote/MSFT:NASDAQ?comparison=NASDAQ%3AGOOGL%2CNASDAQ%3AAAPL%2CNASDAQ%3AAMZN&window=1M https://www.google.com/finance/quote/MSFT:NASDAQ?comparison=...
  - pc86 6y ago
    It went from approximately $235 to $250, which is about 6%. On calls, especially short-dated ones, that can easily be a 40-50% gain. I've got a number of different MSFT LEAPS in my portfolio and they all went up 15%+ on that news.

api 6y ago

The fact that high-ranking politicians and bureaucrats can trade stocks at all is criminal. The moral hazard is unbelievable.

skohan 6y ago
Yes it's the definition of conflict of interest. It's insane that this is allowed
- sneak 6y ago
  I think it's working as intended and that it's insane that people are surprised it's set up this way. The state and large corporate interests in the USA are very tightly integrated and have been for at least an entire generation.
  - skohan 6y ago
    But this is so cynical. Not to be naive, but if we can't at least start from the framework that the government should serve primarily the interests of the people and be outraged when it doesn't, then the American project is pretty much over
    - sneak 6y ago
      I'm not sure that has ever been true, or ever been the goal. The American government does serve the interests of the American people: the American people who own the bulk of the land and the largest companies. George Washington was the largest landowner in the colonies when the revolution started.
      - hpkuarg 6y ago
        But Washington also shocked the ruling elites of the world by stepping down when he did. Clearly, he was cut of a different cloth than other largest landowners in their respective countries.
      - 6y ago

wpietri 6y ago

Whatever the behind-the-scenes truth, I think the appearance of conflicting interests is a problem regardless. For a lot of elected offices and high public service positions, I think their wealth should be put into a blind trust, one constrained by law to buy broad, boring things like index funds. That would surely be a problem for some individuals. But I don't think it's a systemic problem. We only need to find 0.00013% of the US population to fill the Senate and House together; surely there are that many people who are both competent and willing to put the public interest ahead of their own.

sneak 6y ago
I think this presupposes the lie that the government is by, of, or for the (majority of the) people. This is a closed system, and most are not allowed anywhere near the control room. It, including these trades, is working as intended.
- smt88 6y ago
  The US is explicitly not about the majority. The Senate and Presidency are both anti-democratic institions where land controls votes.
- munk-a 6y ago
  > It, including these trades, is working as intended. You can view the US in a lot of cynical ways but it was not created as a vehicle to allow the wealthy to continue to gain wealth at the expense of the poor. Insider trading between congressmen using their posts to fleece the public was never an intent of the government.
  - jhallenworld 6y ago
    It was at least created for them to at least preserve their wealth. In the debates leading up the creation of the Senate, here is a typical argument: "...our government ought to secure the permanent interests of the country against innovation. Landholders ought to have a share in the government, to support these invaluable interests and to balance and check the other. They ought to be so constituted as to protect the minority of the opulent against the majority. The senate, therefore, ought to be this body; and to answer these purposes, they ought to have permanency and stability. Various have been the propositions; but my opinion is, the longer they continue in office, the better will these views be answered" https://founders.archives.gov/documents/Madison/01-10-02-0044 https://founders.archives.gov/documents/Madison/01-10-02-004...

yumraj 6y ago

I'm curious if any of this falls under the definition of insider trading. It should, but I think it doesn't and which is why SEC doesn't get involved in these. Does anyone know?

freeone3000 6y ago
For a long time, Congress had an exemption to insider trading. They no longer do, but, insider trading still requires material non-public information about the company in question -- and Congressional acts are the most public thing possible. Betting that a company's stock will go up (or down) and then making it happen after you make the bet isn't insider trading, it's activist investing, and is totally legal.
- YinglingLight 6y ago
  >Congressional acts are the most public thing possible Not when said action occurs a week before the Congressional act is announced. Is this HN thread flooded with bots or something? Have never seen this level of sympathy for politicians.
  - sneak 6y ago
    What they said was objectively true, regardless of your opinions for or against the situation.
    - devmor 6y ago
      No, it was not true. It was predicated on the falsehood that congressional acts are announced as they are decided.
    - LanceH 6y ago
      The current count for who has pledged to vote for what is highly relevant and private information.
- skohan 6y ago

stereolambda 6y ago

Please correct me, but here's a provocative hypothesis I spent three minutes thinking through. Couldn't you say that speculating with insider information on public markets can be a way for public officials to make a lot of money without marrying themselves to any particular interests? In that case, couldn't it be potentially a mechanism we can exploit for good? Disclaimer: not American, no strong opinion on these people.

jliptzin 6y ago
Your hypothesis assumes that all elected officials must engage in some form of bribery or pay for play. In an ideal world we’d find leaders who put the interests of the country ahead of their finances.
- Tenoke 6y ago
  Or alternatively we can just pay them a lot more since they'll make money anyway, disallow them from earning money in other ways and at least have their profits have no additional negative effects. Not that I expect people would be comfortable paying politicians more (see how many complain about e.g. CEO pay) so I guess we are stuck with incentives for corruption instead.
  - kennywinker 6y ago
    I don't think we need to PAY them more to eliminate corruption - I think we need to change how campaigns are financed. Needing to raise millions every few years to keep your job makes you beholding to whoever has the money
jlarocco 6y ago
I guess I don't see where the "good" is there? Being a representative isn't supposed to be a "get rich quick" scheme. They already make a lot of money and IMO if they're going to invest in stocks they should play by the same rules as everybody else. Edit: On second thought, considering how much they can influence stock prices, maybe they should have stricter insider information regulations. It's a huge conflict of interest.

ABeeSea 6y ago

> Pelosi in Dec 22 was against more stimulus. This is not true. It’s very odd to see the kind of right-wing conspiracies based on outright fabrications spread on HN as literal truths. Here is an article from December 22 were Pelosi is calling for more stimulus: www.cnbc.com/amp/2020/12/22/trump-calls-covid-relief-bill-unsuitable-and-demands-congress-add-higher-stimulus-payments.html Here is her direct tweet dated 12/22: https://mobile.twitter.com/SpeakerPelosi/status/1341557535732604935 https://mobile.twitter.com/SpeakerPelosi/status/134155753573...? Edit: There are outright lies in the source article. Sad day for HN that the lies are getting so much traction and fact checking with 1st hand sources is getting downvoted.

seriousquestion 6y ago
People are confused about this because Pelosi rejected the stimulus in October, prior to the election. She didn't accept until December, post election. Some democrats were urging her to accept it in October: https://twitter.com/AndrewYang/status/1315078896853843970 https://twitter.com/AndrewYang/status/1315078896853843970
- ABeeSea 6y ago
  That’s not what the business insider linked in the tweet says. It says she described the White House plan as “insufficient” meaning there wasn’t enough stimulus in it. How can criticizing a bill for not having enough stimulus mean you are against stimulus? The House had passed the HEROES act for additional stimulus in May 2020. The Republican senate refused to even put it up for a vote. She was always for passing of the HEROES act even during this October - December period. She was always pro stimulus.
  - jfk13 6y ago
    > the HEROES act Does anyone else cringe at this American obsession with naming acts of congress so as to create "inspirational" acronyms?
    - 6y ago

akudha 6y ago

Isn't Pelosi worth like 100 million or something? How much money is enough for these people? :( How quickly are these trades made public? Maybe we should just copy the congress people's trades and make some profit ourselves :P

kennywinker 6y ago
Well, according to the US supreme court, money is speech - so more money more voice. As a concrete example, trump backed his own campaign to the tune of ~$66mil. Without it, I'm not sure he would have gotten as far as he did. (I'm not endorsing this, I'm just saying these are the rules of the game that's been set up) And to answer your second question - not quick enough for the public to act on it.
frockington1 6y ago
Clearance time varies but can take months. They've already collected profits by the time they are disclosed
eloff 6y ago
> How much money is enough for these people? :( What kind of attitude is that? If you have savings, one seeks a return on said savings by investing them. That's perfectly normal and rational behavior at all wealth levels.
- gowld 6y ago
  "normal and rational" is different from "ethical or moral". "All wealth levels" are not the same.
  - tastyfreeze 6y ago
    It is not immoral or unethical for somebody to have or earn more money than another. All people try to increase their wealth however they can. At lower income levels that is very difficult but the behavior is the same.
  - eloff 6y ago

gexla 6y ago

Pelosi is a master politician and the pandemic has been a fast moving situation. I could see Pelosi being against the stimulus and then fast switching based on changing currents in the minds of voters.

itsoktocry 6y ago
Great. Why does she have to buy shares in companies that align with her "switching"?

SilasX 6y ago

>Her husband buys deep ITM TSLA and AAPL calls that day. Stupid question: if you were expecting an upswing in a stock, wouldn't you get the most returns from an out of the money option? For a deep ITM you're paying the same as the underlying stock plus a tiny premium -- you might as well just buy the stock.

ABeeSea 6y ago
A large swing increases the IV which increases the premium (since the stock is now more likely to swing back down). Also decreases the risk in case the trade moves against you.
- SilasX 6y ago
  But then you'd own the option so you'd benefit from the volatility and can quickly cash out, right?
  - ABeeSea 6y ago
    Yes, you cash out the options when the IV spikes when swings up.
    - SilasX 6y ago
      So, back to the original question: wouldn't OTM options make more sense in their position?
      - ABeeSea 6y ago
        If the bet is wrong, OTM options expire worthless. ITM options give you less risk, but for a premium (you buy fewer contracts with the same amount of money). But still with more leverage than outright buying the stock. This is captured in the concept of Delta one of the “greeks” which is a parameter in the black scholes equation and solution that tries to measure the pricing movement of the option relative to the price movement of the stock. Owning stock has a delta of 1. ITM options have a delta closer to 1 but not exactly 1, OTM options have a delta closer to 0, but not exactly 0. ATM options of a delta around .5.

frankfrankfrank 6y ago

Re. the Gottheimer trading; if one is to believe the reports of his net worth based on public records [1][2], he supposedly almost tripled his wealth in just one year. That seems quite unusual. The fact that he appears to trade mostly $MSFT while also being a former MSFT Executive and seems to be extremely accurate in his options trading of that $MSFT, only really adds to the extreme suspiciousness. Is there no entity that even just tries to keep tabs on or possibly investigates these people, let alone charge them with crimes where appropriate? It seems that where there is smoke … and fire … there may actually be fire. [1] https://www.nj.com/politics/2019/07/the-richest-new-jersey-members-of-congress-ranked-theres-a-new-leader-this-year.html https://www.nj.com/politics/2019/07/the-richest-new-jersey-m... [2] https://finance.yahoo.com/news/richest-member-congress-state-170033867.html https://finance.yahoo.com/news/richest-member-congress-state...

adamrezich 6y ago
> Is there no entity that even just tries to keep tabs on or possibly investigates these people, let alone charge them with crimes where appropriate? well there's this thing called the IRS that seems to spend most of their time auditing random citizens when the numbers they submit on their tax forms doesn't match the numbers the IRS already calculated on their side. maybe we could streamline that absolutely ridiculous process & their efforts could be used elsewhere
- pc86 6y ago
  This argument comes up a lot and it's an astounding oversimplification and gross misunderstanding of how taxes work in the US. The IRS does not know how much you owe until you file. They may have a rough approximation, but they absolutely don't know anything close enough to be able to bill you.
  - dbt00 6y ago
    If you only have W2 income and take the standard deduction, 99% of what you need to know they know. Only changes like new address, dependent, etc would really be relevant.

mdoms 6y ago

> This is fucking unreal. It's USA. Corruption is the norm.

tzs 6y ago

I don't know about the Gottheimer example, but their Pelosi example seems pretty far fetched. First of all, Congress passed a stimulus bill on Dec 21, the day before her husband bought those calls. Any 5% gain over the next couple of days or so is for more likely in response to that, and in anticipation of Trump signing the bill soon, than it due to Pelosi changing her mind about some possible future stimulus that hasn't even started being negotiated yet. Second, the 5% "rally" for AAPL only lasted a week. TSLA's rise lasted longer, but it was rising before this. The article doesn't say anything about whether or not they actually exercised their options to buy the stock, and then sold it to actually profit. If they didn't, then this "rally" had no real effect on them. Third, looking at other tech stocks, GOOG pretty much did nothing around or for a while after Dec 22. AMZN fell for a day or two, spiked up, came back to around what it was. FB was kind of like AMZN, but the spike was smaller and the fall was deeper. Looking beyond tech stocks, the Dow and the S&P 500 don't show anything happening around the time. Most things continued the trends they had been on before. That suggests that Pelosi's change of heart about possible future stimulus bills didn't have much effect on most stocks. So why did they buy AAPL and TSLA? Even if they thought there would be an effect and wanted to exploit it, buying TSLA to do so makes no sense. AAPL makes a little more sense, but not much. AMZN or some other company whose products people would actually likely spend stimulus money on would make more sense.

femiagbabiaka 6y ago

Oligarchy in the U.S. is giving my mother country (Nigeria) a run for its money.

tomcam 6y ago
Don't be silly. The U.S. is infinitely more corrupt than Nigeria. Forgive me, but there's just no comparison.
- femiagbabiaka 6y ago
  hah! I am sympathetic -- the U.S. corruption is definitely more impactful to the world, and on a much greater scale. But it is also more covert and _usually_ doesn't creep into the level of person to person bribery in everyday interactions (IME).

pbreit 6y ago

There is zero reason for congresspersons to trade options or really even any individual stocks. The optics are horrific.

disgrunt 6y ago

Here's a recent Pelosi options trade with the Microsoft AR contract announcement. [0] [0]: https://www.thestreet.com/mishtalk/economics/nancy-pelosis-husband-uses-call-options-to-buy-microsoft-ahead-of-big-govt-contract https://www.thestreet.com/mishtalk/economics/nancy-pelosis-h...

jwilber 6y ago

Casually making millions, almost certainly illegally, while her district suffers as one of the nation’s most severe when it comes to income inequality. [0] Every day I become more and more convinced that all politicians are basically the same - chasing self-interests, power, and prestige. [0] https://www.ppic.org/publication/income-inequality-in-california/ https://www.ppic.org/publication/income-inequality-in-califo...

ABeeSea 6y ago
California has high inequality compared to other states because the rich people don’t want to live in those other states. It’s not like people are rushing to move to Mississippi or West Virginia. It’s easy to have low inequality when everyone is very poor like West Virginia.
efnx 6y ago
I think this is just one way in which many politicians are the same. This does not mean that they share all the same concerns or have the same plans for the country.

goatinaboat 6y ago

This is fucking unreal. How do you think so many people on government salaries become super rich, whilst supposedly working for the government?

mgraczyk 6y ago

Obviously having access to insider information and trading based on that information is not okay, but the specific trade called out here does not sound like the sort of thing a person would do if they had information about future movement of the underlying $MSFT. They traded deep ITM calls 4 months out for deeper ITM calls 1 month out. My guess is that this particular trade is part of a risk management strategy, not an adjustment based on insider information.

IAmGraydon 6y ago
Yeah that didn’t make sense to me either. It sounds like the author isn’t very knowledgeable about how options work.

IAmGraydon 6y ago

Yep. The very people we elected and who are supposed to answer to us are fleecing the American public. This needs to be investigated further by the SEC.

tootie 6y ago

Isn't that completely fake though? Pelosi was pushing stimulus for months. And the negotiations were all very public. Trump and McConnell were holding it up.

exabrial 6y ago

Wait until you see how much she got paid to build a few miles of railroad.

wdn 6y ago

Rules are for thy not for me. Congress insider trading is not new. Peter Schweitzer’s book “Throw all of them out” details them. The book was released in 2011. How is this an acceptable. Is politicians above the law?

vict7 6y ago

To provide an additional example. Unelected ex-senator Kelly Loeffler's husband is chairman of the New York Stock Exchange. She made trades using non-public information. How is this sort of conflict of interest legal? https://www.politifact.com/factchecks/2020/oct/31/raphael-warnock/fact-checking-raphael-warnocks-claim-georgia-sen-k/ https://www.politifact.com/factchecks/2020/oct/31/raphael-wa...

menomatter 6y ago

Is it possible to see how much has each member of congress profited/lost doing trading over time? We can build a tool like this right? As all the data in public?