Congress Trades on Trust

Sergio Ibarra
Associate Editor
Loyola University Chicago School of Law, JD 2024

When Nancy Pelosi releases financial disclosures related to stock trades, those disclosures are filed with the Clerk of the House of Representatives. The Clerk publishes all financial disclosures on under the “disclosures” tab. Shortly thereafter, Pelosi’s stock trading disclosures are re-published on TikTok and Reddit where Zoomers and Millennials are copying all of her trades. According to a Pelosi spokesperson, she does not “personally own any stocks and that the transactions are made by her husband”. The Stock Act requires Pelosi to disclose these transactions within 45 days due to the fact that they are made by a member of her immediate family.

Pelosi’s position as not only a member of Congress but as Speaker of the House provides her with non-public information that could give her an advantage in trading stocks. The timing of Pelosi’s trades has drawn criticism for being close to related congressional actions. For instance, Pelosi’s husband of Nvidia shortly before Congress announced a bill that would provide 50 billion in subsidies to semiconductor manufacturers like Nvidia. Pelosi’s husband is also invested in electric car manufacturer, Tesla, while she frequently supports legislation in favor of electric car manufacturing. She has consistently denied any suggestion that her husband has made any transactions utilizing any non-public information.

Other members of Congress

Pelosi is of the government that files these types of financial disclosures. The Stock Act requires members of congress, congressional employees, executive branch employees, judicial officers, and judicial employees to disclose stock trades within 45 days. From 2019 to 2021, 183 sitting senators or representatives have disclosed the trade of a stock or another financial asset made by themselves or by a member of their family. The New York Times recently released a report detailing how 97 of these 183 current members of congress have traded stock in the industries directly affected by their legislative committee work. , Ohio Representative Bob Gibbs bought shares of, a pharmaceutical company, while that was investigating AbbVie. Another example is California Representative Alan Lowenthal, who filed a disclosure stating that his wife sold shares one day before a House committee, that Lowenthal sits on, released its findings that Boeing had mishandled two fatal crashes.

The executive branch

The Stock Act is meant to prevent insider trading. Even when government officials are acting appropriately, their ability to make trades becomes suspicious when they make . For instance, in October 2022, Atlanta Federal Reserve President,, revealed that he misinterpreted federal trading rules and made trades during “blackout” periods when government officials are barred from making trades. Bostic maintains that these were simply mistakes and that the trades were . The Chairwoman of the Atlanta Federal Reserve has said that the Board has accepted Bostic’s explanation, and has accepted his revised financial disclosures because he did not manage the trades himself.

Concluding thoughts

Bostic’s position in the federal government as President of the Atlanta Federal Reserve makes it difficult to believe that he committed such an oversight. In fact, trading done by any government officials should draw skepticism in regard to the propriety of their actions. The Stock Act is in place specifically to deter members of Congress and other members of the government from engaging in insider trading. However, this framework is not enough to give the public confidence that their elected officials are not abusing their positions for personal gain. No regulatory framework will be enough to ensure the proper level of confidence in government officials. The intersectionality between the work the government does and the type of information that would benefit an investor is too great. Congress creates legislation that regulates commerce in the United States. The content of regulatory legislation directly affects the value of corporations and industries.

Members of Congress should not be able to have this level of control over stocks that they own. Members of Congress and other federal employees also receive briefings and advanced notices on national shortages, corporate investigations, changing foreign relations, etc. All of this information can affect the value of corporations. For example, if a member of Congress is responsible for investigating a corporation and they own stock in that corporation, that presents a clear conflict of interest because the personal interests may conflict with their professional responsibilities.

Ultimately, the ability to buy or sell stock invites the suspicion of an unfair advantage. Even when government officials are following the existing regulatory guidelines, their ability to make trades can create the  . Thus, the only way to properly regulate stock trading for members of congress and other government officials is to institute a ban on stock trading.