Investors are increasingly tracking congressional trades as popular Congress members continue to retain high stock market returns amid prolonged economic volatility. California representative and former House Speaker Nancy Pelosi is also known for making highly profitable trades that helped her stock portfolio return over 700% since 2014. While Nancy Pelosi’s husband, Paul, carries out the trades, she has vehemently opposed criticism of her sharing confidential information with him that can influence markets. Despite growing demand to push bills banning Congressional trades through the Senate to prevent insider trading, Pelosi has made several trades that have resulted in huge gains or helped avert significant losses.
Pelosi’s Profitable Trades and Controversies
In 2021, Pelosi exercised Microsoft call options before the tech firm secured a US defence contract. Next year, she bought Nvidia call options when Congress passed the CHIPS Act to subsidise the semiconductor industry. Pelosi went on to buy more Nvidia call options in 2023 with a $120 strike price way before the AI company announced its 10-for-1 stock split completed in June of this year. She also disclosed in a recent periodic transaction report that she purchased another 10,000 Nvidia shares in late June, around the same time when bipartisan senators floored the ETHICS Act to ban Congressional trades by imposing huge fines for violations.
However, the report also revealed that Pelosi sold 2,000 shares of Visa Inc. worth over $500,000 on July 1, less than three months before the stock price tanked significantly to hover around $269 on September 25. The nosedive was triggered soon after the US Department of Justice (DOJ) filed a civil antitrust lawsuit, accusing the payments giant of illegally monopolising the debit card market.
Visa’s Actions Cost Americans Billions In Excess Fees, Affected Prices Of Nearly Everything
The DOJ slapped charges after a years-long review by its antitrust department. The complaint highlighted that Visa retains its dominant market share by forcing “exclusionary” agreements on merchant partners and banks that penalise them with high rates if they route a “meaningful share” of debit transactions via competitor debit networks or payment processors. Subsequently, merchants and banks pass on these costs imposed by Visa to consumers by lifting prices or lowering service quality, which has resulted in Americans paying billions of dollars in extra fees over the years.
“As a result, Visa’s unlawful conduct affects not just the price of one thing — but the price of nearly everything,” noted Attorney General Merrick Garland in a DOJ press release. Visa also went to great lengths to stunt innovation in the industry, which could rival its products and services by paying competitors millions of dollars annually. The payments processor is also accused of hurting competition by blocking emerging firms from accessing resources and data essential to scaling their businesses. The DOJ stressed in its complaint that Visa allegedly has agreements with global companies like Apple, PayPal, and Square that are not beneficial for the public.
Visa’s Response to the Lawsuit
Visa described the DOJ lawsuit as “meritless,” ignoring the reality that Visa is among many competitors in the rapidly growing debit payments space. The company is able to bring in $7 billion annually only in processing fees as over 60% of US debit transactions run over Visa rails.
“Anyone who has bought something online or checked out at a store knows there is an ever-expanding universe of companies offering new ways to pay for goods and services,” said Visa general counsel Julie Rottenberg. “We are proud of the payments network we have built, the innovation we advance, and the economic opportunity we enable.”
Visa and rival Mastercard have surged in valuations since the early 2000s, reaching a combined market capitalisation of almost $1 trillion as consumers increasingly use credit/debit cards for online and store purchases.
Pelosi’s Stock Sale Timing and Response
However, when Pelosi sold Visa shares in July, there was no public indication of impending antitrust charges. “Speaker Pelosi does not own any stocks, and she has no prior knowledge or subsequent involvement in any transactions,” the congresswoman’s spokesperson told The New York Post. Former Securities and Exchange Commission attorney Ron Geffner urged market participants to verify if the transaction was part of a broader portfolio change before judging her “unfairly.”
In Conclusion
It is imperative for lawmakers to maintain transparency and ethical standards in their financial dealings to uphold public trust and confidence in the system. The issue of congressional trading and potential conflicts of interest must be addressed through legislation to ensure fair and equitable practices in the stock market. As the debate continues, it remains essential for investors to conduct thorough research and due diligence before making any investment decisions. Remember, investments are subject to market risks, and past performance does not guarantee future returns.
