> 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.
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.
Just require them to announce their trades publicly 24 hours in advance. And let them manage their own finances. All these shenanigan's would disappear.
We only need to find 0.00013% of the US population
Maybe we should use sortition then instead of elections? What could be more democratic than random average people (meeting some criteria) taking a turn at the wheel?
I agree that ALL government employees, their spouses and companies should own no individual stocks until they leave office/job. However, the politicians are just the tip of the iceberg in regards to the rigged game of Wall Street. We have bigger fish to fry but no one seems to like fish anymore.
Politicians should take a vow of poverty, agreeing to never spend more in a year than the average American. Great way to weed out all of the sharks and keep only the people who actually care and want to lead the country in the right direction, whatever that takes.
Would it really help? You can't restrict their complete social circles as well. All it takes is 1 willing friend who will happily accept your stock tips ahead of large announcements and who's willing to give you a share of the profits in return.
I speak for a lot of people that while I agree with you in principle, the sudden interest in this idea in Republican circles after the prior administration's absolute mockery of conflict of interest and self-dealing laws seems hypocritical.
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.
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.
>Pelosi's husband has been very bullish for a long time on Tesla, Apple & tech in general I do believe.
I'm curious where you are reading about Paul Pelosi's stock picks. Regardless, so what? He has no business owning and/or trading shares of companies the person he shares a bed with has influence over.
unusualwhales are incentivised to talk their own book so it's safe to assume they've cherry picked these examples.
The honest way to see if politicians get an outsized return from this type of trading is to run a backtest, with appropriate hedges where you buy whenever anyone buys and sell whenever anyone sells and hold for a medium amount of time (3-6 weeks seems reasonable). unusualwhales know this so the fact that this sort of analysis is missing is telling. In particular, note how they provide stats for what the trading trends are, but not for the outsized performance.
The charts at the end of the article are a lot less impressive and they don't obviously look better than random.
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.
> 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
The SEC should be investigating things like this, and do actually bring a lot of enforcement action against various companies and individuals, but I suspect it might be a career-limiting move to target a politician for all but the most gross of abuses.
3x or 5x of your wealth if you correctly time a global crisis is not unheard of. Even in boring stuff like real state. With options and tech it probably happened last year to a substantial amount of 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.
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.
Last I checked couple years ago, she was worth $140 million. She's worth even more now.
I am not against non politician people having tons of money. I am against politicians getting rich using insider trading. And the same politicians also accusing their political opponents of doing the very thing they are doing themselves - even more. Hypocrisy and double standards is what makes me disgusted.
There's not a single profession I can think of where someone would gladly be working when they are 80 years old. House and Senate needs term limits. 8 years max. No one should be allowed to become a life long politician and get rich off of it.
But unfortunately, what we want is different from what we get. There's no way these politicians will pass bills to limit their own terms. These people convince the ordinary people that they are all moral and care about them. But meanwhile they are getting rich off of public's trust in them.
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.
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.
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.
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.
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.
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.
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.
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.
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.
I'm pretty sure they can't be charged with insider trading for some loophole reason. It's 100% insider trading though. US politicians and their families shouldn't be allowed to buy/sell any stocks as a condition of public office. And they shouldn't be able to accept revolving door money after leaving office as well.
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.
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.
Personally I think that the conflict of interest posed by stock holding lawmakers is bigger than the advantages they gain from trading on information that only they are privy to.
For example will a lawmaker holding a large portion of their wealth in Apple shares want to introduce legislation that forces Apple to allow alternative app stores (costing Apple the 15%-30% cut of all the app store sales)?
In most situations this is called insider trading and is considered unfair in public markets since the trades of insiders may be concealed, like through a family member.
Within an organization making a decision that advantages oneself is unethical since the purpose of the most organizations is not to fulfill the personal interests of its employees.
It would make some sense to convert all property holdings of a government employee to financial instruments related to the health of the government such as treasury notes. That way their personal interests are at least aligned with those of the government. To the degree that the instruments measure aspects of the government that are not totally aligned with the governed is a problem however.
Sure, speculating on insider information on public markets is a great way for anyone to make a lot of money. It's also highly illegal, although there does seem to be some fairly prominent views that allowing insider trading would actually help get relevant information priced into the public markets.
But even if you're one of those proponents of insider trading, surely this is clearly different and worse than that, because prominent politicians surely have some power to influence winners and losers.
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.
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:
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.
I also thought this was odd. This site alleges malfeasance based purely on analysis of data but then alludes to a person's thoughts on specific dates without citation.
I also found this article on 2020/12/21 where Pelosi says she wanted more stimulus, but the $600 checks were significant.[1] So it seems all the more unlikely that she said she was against further stimulus at any point on the 22nd.
People are confused about this because Pelosi rejected the stimulus in October, prior to the election. She didn't accept until December, post election.
>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.
It's not stupid. I'm questioning whether the original person understands what a deep itm call means. If you knew a stocks gonna move, you buy at the money or out of the money. Never would you buy _deep_ in the money. Makes no sense.
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.
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?
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.
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?
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.
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.
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.
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.
The very people whose job it should be to stop this sort of thing are the ones who are profiting from it. How do you change this?
No really, how can we force congress to change the rules so that elected officials can't profit from inside information? Why would they ever vote for such a bill?
We elect people who actually believe in governance instead of people out to make a buck. I know that everyone's going to act in their own interest (that's sorta how interests are defined) but some people feel a legitimate duty and loyalty to country and welfare above their own personal comfort - these people tend to be torpedoed very early on in US politics because they refuse to cozy up to special interests to play the campaign finance game but they do exist.
It's easy to be a thorough cynic in the modern world, but most people aren't out to con everyone else when they get the chance and, if a spotlight is shone on the problem, will respond that actions should be taken to make things more just.
Here's an article calling out the stock trading specifically around Covid treatment drugs with some congressmen and politicians calling out the behavior:
Meh, a lot of the people you're describing are incredibly incompetent and succumb to simplistic ideologies. Over the long run they end up in the same position that everyone we're complaining about ends up in.
While not entirely related, I remember a study by the U.S. military during the Vietnam war that said the worst performing soldiers were the ones who were patriotic and served due to a sense of duty. I'm simplifying here but the idea was that those were often the first people to feel a sense of entitlement and feel as if because they had good intentions that they were "owed" something.
Belief in governance is cheap and doesn't do much to solve anything. Competency, skills, leadership, those are qualities that result in change... having a good heart and believing in or trying to execute various altruistic ideologies is basically a loser's game.
We elect people who seek power for the sake of power, and sometimes pretending to care about others help them acquire it, and sometimes when the stars align, having to actually help others helps them keep it.
> It's easy to be a thorough cynic in the modern world...
Checks and balances are supposed to address this issue. I think the only one which really does the job here would be the right to initiative/referendum. That or an electoral solution, but that one's really hard since new legislators will be incentivized to maintain the status quo. You would almost need a new party defined around that one issue, which is hard to imagine in the US.
Maybe an executive order could also prohibit this? I'm not sure.
I'm frankly disturbed that this kind of specific trading by people in power is going on at all. Salaried federal employees above a certain level are strongly encouraged to invest only in generic mutual funds to avoid even the appearance of conflict of interest. When I look at the above trades I'm not sure whether anything technically illegal occurred but I'd support making all specific trading illegal to avoid even the appearance of unethical behavior. Higher powers deserve to be held higher standards.
> When I look at the above trades I'm not sure whether anything technically illegal occurred but I'd support making all specific trading illegal to avoid even the appearance of unethical behavior.
That sounds like an excellent idea to me. While in office, can only trade TSP funds, or their rough equivalents outside of TSP. If you wanna sell something that isn't a giant index fund? Do it before you take office.
Then I'd further support that all trading would have to be done via a 10b5-1 plan, with a blackout window of at least 6 months.
my naive solution: politicians become monks. They go without. They are provided modest housing and budgets. I'm sure there are zounds of issues with it, but I like to imagine servant leaders who go without to do more for the communities they serve.
I'd be happy with that, but perhaps an easier solution is to make them moderately wealthy. Pay them a top 5% salary with a guaranteed pension for life, plus mandatory open finances for life. Then there's much less incentive to resort to graft.
That doesn't really solve the problem because how do we make them become monks? We already have a blueprint on how to hold them accountable: hold them to the same standard as those working in financial services with access to PII. Essentially make it impossible for them to be active traders; they can even still invest in ETFs and hands off advisors/roboadvisors like Betterment.
I've had a similar thought on many occasions, but even then, they will find alternative ways to acquire wealth and power. The clergy of many religions, in aggregate, have a lot of wealth and power, even if the wealth is not directly in their name.
No system can prevent humans from exercising their basic instincts, emotions, urges, needs, and wants.
The Catholic Church tried this and it did not work. Monks and nuns still become greedy, still compete for positions of power and still abuse their power when they get it.
"No really, how can we force congress to change the rules so that elected officials can't profit from inside information? Why would they ever vote for such a bill?"
Well, those people profiting off of it would have to vote against each other's interests.
Money wins elections. Not issues, which are just window dressing. The media cartels own your attention for all your waking ours and, as MiB said, while individuals are rational and sensible, people (that is, the voting electorate) are easily scared, easily duped, and increasingly easily controlled.
So it's not just "vote against being rich", it's also "vote to lose the next election".
I think I agree in theory, but I think we've seen in practice that people are easily controlled by mass media. Wouldn't we just be moving the locus of control?
You cannot. As long as there are rigged markets and cadres of elites, we can truly do nothing. Sad, really. Not helping the matter is half of the US is below average intelligence and will elect crooks because they say the right things.
If only there were more Ron Wydens and AOCs. But you see red states electing nutjobs who barely have high school degrees (Boeber) because they shout the loudest.
AOC won’t be immune to the same pressure that eventually corrupts longtime politicians. She’s just barely begun her second term. I’m certain she’s already begun to make perfectly legal deals and investments that are going to look shady to average people.
Also, one person’s “shouting nutjob with barely a highschool degree” is someone else’s “passionate populist who represents the common people.”
Wyden and AOC enjoy the luxury of not having to worry about re-election due to residing on extremely blue states. They would not be so bold if they represented Texas or Florida, for example.
The same goes for Republican representatives in highly red states.
We have to do the work. We have to educate ourselves on the issues which means reading bills as they are going through the process and being voted on, calling and writing our representatives to tell them how we want them to vote on those bills.
I have family who just love to complain about what legislators are doing and how they're voting but have not once, ever, actually contacted their representative about these issues. Not once have they actually read the bills and tried to understand them. It's all based purely on whatever news channel they're watching. Yet, they somehow think that through all that complaining they're actually accomplishing something.
I know my family isn't unique in this. I was just talking to a contractor who is doing work on my house that started in on this nonsense.
Congress already passed the STOCK act, that is why these disclosures are required, and partially why this kind of securities fraud is illegal. It is the job of the SEC, and the justice dept to enforce this
In the past, the things that ultimately worked were collective revolts, strikes, sabotage, assassinations.
I think we need to acknowledge that, in the same way that the people with the power to stop this are profiting, they are also the people with the power to change who is in power or how they get in power. Elections are not effective ways of changing systemic power structures anymore. Society pretty much needs an overhaul, especially in the face of serious existential risks like climate change or looming military conflicts.
We have to educate the broader populace about the issue, then politicians will use the issue to gain political capital, win elections, and maybe change legislation and practices.
In some states the people can literally make the law via public initiatives. If you don't have that process at home push for THAT. Looking at this map there are a lot of states that need to work on step 1.
I feel like a good first step would be requiring that any assets over some small cutoff be held in a blind trust. It wouldn't solve all problems, but it sure would solve a lot.
Since the media and intelligence agencies are great at vilifying any dissent (see "Capitol Riot" and how difficult it is for them to even get representation), there is no hope. The US is not going to get better as corruption is rampant and most are in the dark or powerless.
Politicians like Bernie Sanders give hope, but they are few and far between, and muzzled.
Perhaps the migration away from centralized news sources that are filtered by advertisers & intelligence agencies (see Manufacture of Consent) could help move us towards actually having information in the mainstream so that we can have a say, since our election system is rigged by the two right-wing parties, but there are too many decision makers still reading NYT and WSJ.
Social media is clamping down on "fake news".
The majority in the House/Senate are trying to push censorship for this reason, and now they are even trying to change the judicial branch to suit their whims.
They are neither left nor right. There is a middle elite group that exploits politics on either side of the aisle to maintain power. And that's all it is. And they get filthy rich, but so too does the CCP which is left-wing. Taking advantage of power for personal gain is not an exclusive domain of one wing or the other.
At any rate these oversimplified analogies break down among many lines upon closer inspection. There are elite insiders and then there's the rest of us.
Well the Capitol riots were not just any dissent. They were the gathering of a mob of people with crazy conspiracy theories (that very probably would not even agree with each other) as part of mediatic stunt (just not "the media") to give legitimacy to the claim the election had been stolen so the Republican party could suck up more money from its base for "the cause". I have myself much respect for Bernie Sanders and people fighting for more democracy and more equality please, please don't put them in the same bag than people being manipulated into giving time and money for imaginary causes.
> An amendment may be proposed and sent to the states for ratification by either:
> The U.S. Congress, whenever a two-thirds majority in both the Senate and the House of Representatives deem it necessary; or
> A national convention, called by Congress for this purpose, on the application of the legislatures of two-thirds of the states (34 since 1959). The convention option has never been used.
> No really, how can we force congress to change the rules so that elected officials can't profit from inside information? Why would they ever vote for such a bill?
The recent Black Lives Matter protests have taken a far more aggressive turn against systemic issues. Systemic issues such as the economy, the stock market, policing as a whole, and capitalism in its essence. Donating to bail-out funds, joining the protests, increasing awareness in the problems our economic system has created for us without proper good-faith regulations is all helpful.
You can't reform corruption to this level. You need to cut it out and start over.
trying to stop the trades is the wrong fix. The right fix is remove their ability to affect markets. Getting to choose winners and losers will always create opportunity to abuse this privilege.
Someone has to wield political power over companies right? I would rather senators who are restricted from trading than senators who are restricted from lawmaking that might move a stock price.
I disagree with this. The people we elect to govern have to be able to govern. But, they maybe don't need to have any business holdings / stock while they're in office.
This is fantasy, the rules by which the country is run inevitably effects the markets. Raise import taxes, local manufacturers do better, importers worse. Lower import taxes, the opposite. Build roads, construction companies and their supply chains do better. Weaken environmental laws, oil companies do better. Make it easier to sue for health damages, personal injury lawyers do better. Fund the military, defense contractors do better. Etc, etc.
Of course if you actually work in financial services industry, your personal trading is extremely restricted.
This is regardless of being in no position to see positions/flow/etc that would give you any insider edge.
The industry generally sees it as easier to show compliance by having locked down personal trading by employees.
Usually this takes the form of - ETFs only, pre-clearance required, 30 day holding periods, limited to using only a list of 5 approved brokers.. and sometimes all of the above.
The restrictions apply not just to spouses but to anyone in household, and you have to attest you are reporting any holdings of say.. your parents, if you still live at home.
So the mother of a live-at-home college grad tech support analyst who plugs in phones at a bank has more trading restrictions than senior politicians :-)
This is more or less what everyone in the registered investment adviser & mutual fund world must do. There’s quite a lot of compliance software to facilitate approval and checks before and after a transaction is effected in a personal account and the personal transaction history is compared, broadly, with market performance and internal fund transactions periodically to check for overlapping trades (+/- a week) in the same direction.
I had to follow these ridiculous rules despite the fact that I never actually had access to PII and was working as programmer at Goldman Sachs (in PWM, no robo trading or anything). These rules seem to be in place mostly for (relatively) poor people.
My apologies, it wasn't my intent to imply that myth. I actually completely agree with your position on short selling. At the time of writing it just seemed a bit weird to me, and possibly an incorrect alignment of interests, for a US politician to take a short position in SPY...
Hasn't the last year very clearly demonstrated that the ability to lower interest rates and print money has had far more of an impact on the market than anything else? Stocks are practically moving up and down in unison, the market is almost entirely macroeconomics driven when 40% of all USD was created in the last 12 months.
If they can invest in total market indices while having the ability to control the money supply, even if they can just go long, it doesn't matter.
Honestly, this should be held for any positions where insider information is clearly a conflict. Maybe not in specific instruments, but investments should be made through a third-party money manager.
My thought was that they (and immediate family) would have to put their assets into a blind trust could be disolved upon their leaving office. They should have no ability to make personal investment decisions while they are in a position of such influence and insider knowledge.
I agree, it's a start. But importantly it (attempts to) align their interests with the broader US economy. Also it still allows them to invest for their personal futures, which I believe is a right.
In the financial industry we have restrictions not only on our own trading accounts, but on any account that we might have reasonable influence over. In my particular case, this means both my brokerage accounts and any of those belonging to a spouse. This is a requirement by our compliance departments to follow SEC regulations regarding insider trading. I don't see why similar rules would not be applied in this setting.
Exactly. If you work for a bank, you can’t buy certain stocks. Some firms will limit you to ETFs and indices. Why can’t we apply simple private sector rules? Politicians, both republican and democrats, are crooks. I don’t think you can contest that outside perhaps a handful of public servants.
What if we just regulated the 0.01% who's wealth is such that it makes the top elected officials in our country have a seemingly insignificant compensation.
Pelosi makes millions during the 'deadliest pandemic in history' and no one turns an eye. Problem is this will fade away like every single other important topic of these ruling elites, who don't give a single f*k about you or me or any social issues.
They are plainly there to shove through their friends interests, profit off of insider information, and get out without going to jail. Every single one of them.
Until we all start holding these people more accountable, and better educating ourselves on the issues, nothing is going to change and they know it.
Here is, in particular, what they know: We as a whole despise Congress but somehow manage to convince ourselves that, "My representative is the only one who is honest!" so we re-elect them over and over again.
Here is another thing they know: the number of people I know personally who bitch and complain about issues based purely on headlines they've read or heard (note, it's ONLY the headlines. they can't be bothered to actually read the article) is, for me, astounding. In other words; the people don't want to do the work of really educating themselves and the politicians take advantage of that.
Let me say it again. Until we educate ourselves and demand that the people we elect be more accountable to us, the people, then they will. not. change.
Where are they aggregating all this insider data from? Is there an index of stocks being traded by government insiders and officials that can be tracked in real-time?
> Like the US Senate, elected members in the US House of Representatives must disclose financial activity they or their spouse or their dependent children conduct while in office. These financial disclosures can be found here.
On the flip side, are there any congresspeople who have publicly put all their assets in a blind trust? Any who have advanced bills requiring this of their colleagues?
The solution to problems like this is elections, and you would think "My opponent is insider trading while I literally can't" would make a great campaign ad.
Readit News
> 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.
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.
People should not be able to make bets on matters over which they secretly control the outcome.
That means any federal official should have their investments behind a blind trust of some sort, no exceptions.
Maybe we should use sortition then instead of elections? What could be more democratic than random average people (meeting some criteria) taking a turn at the wheel?
Deleted Comment
This is a closed system, and most are not allowed anywhere near the control room.
It, including these trades, is working as intended.
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.
I'm curious where you are reading about Paul Pelosi's stock picks. Regardless, so what? He has no business owning and/or trading shares of companies the person he shares a bed with has influence over.
The honest way to see if politicians get an outsized return from this type of trading is to run a backtest, with appropriate hedges where you buy whenever anyone buys and sell whenever anyone sells and hold for a medium amount of time (3-6 weeks seems reasonable). unusualwhales know this so the fact that this sort of analysis is missing is telling. In particular, note how they provide stats for what the trading trends are, but not for the outsized performance.
The charts at the end of the article are a lot less impressive and they don't obviously look better than random.
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-m...
[2] https://finance.yahoo.com/news/richest-member-congress-state...
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
How quickly are these trades made public? Maybe we should just copy the congress people's trades and make some profit ourselves :P
The problem with Pelosi and others is that the money comes from abusing their power, and is in effect taken from other investors.
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.
(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.
I am not against non politician people having tons of money. I am against politicians getting rich using insider trading. And the same politicians also accusing their political opponents of doing the very thing they are doing themselves - even more. Hypocrisy and double standards is what makes me disgusted.
There's not a single profession I can think of where someone would gladly be working when they are 80 years old. House and Senate needs term limits. 8 years max. No one should be allowed to become a life long politician and get rich off of it.
But unfortunately, what we want is different from what we get. There's no way these politicians will pass bills to limit their own terms. These people convince the ordinary people that they are all moral and care about them. But meanwhile they are getting rich off of public's trust in them.
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-califo...
It’s easy to have low inequality when everyone is very poor like West Virginia.
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.
Deleted Comment
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.
Does anyone know?
Disclaimer: not American, no strong opinion on these people.
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.
For example will a lawmaker holding a large portion of their wealth in Apple shares want to introduce legislation that forces Apple to allow alternative app stores (costing Apple the 15%-30% cut of all the app store sales)?
Within an organization making a decision that advantages oneself is unethical since the purpose of the most organizations is not to fulfill the personal interests of its employees.
It would make some sense to convert all property holdings of a government employee to financial instruments related to the health of the government such as treasury notes. That way their personal interests are at least aligned with those of the government. To the degree that the instruments measure aspects of the government that are not totally aligned with the governed is a problem however.
But even if you're one of those proponents of insider trading, surely this is clearly different and worse than that, because prominent politicians surely have some power to influence winners and losers.
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/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.
I also found this article on 2020/12/21 where Pelosi says she wanted more stimulus, but the $600 checks were significant.[1] So it seems all the more unlikely that she said she was against further stimulus at any point on the 22nd.
[1] https://news.yahoo.com/nancy-pelosi-wanted-more-600-22542493...
Some democrats were urging her to accept it in October: https://twitter.com/AndrewYang/status/1315078896853843970
Dead Comment
It's even more odd to see the, "if you disagree you're alt-right/ a Nazi" mentality on HN.
Why does a member of congress need to day-trade stocks, let alone leveraged derivatives? It's absurd.
maybe on that one point, but the fact the democrats trade way more on the markets is not a conspiracy theory, it's an outright conspiracy.
why are you defending these people? because they're democrats on paper?
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.
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?
https://www.politifact.com/factchecks/2020/oct/31/raphael-wa...
Deleted Comment
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.
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.
[0]: https://www.thestreet.com/mishtalk/economics/nancy-pelosis-h...
It's USA. Corruption is the norm.
How do you think so many people on government salaries become super rich, whilst supposedly working for the government?
No really, how can we force congress to change the rules so that elected officials can't profit from inside information? Why would they ever vote for such a bill?
It's easy to be a thorough cynic in the modern world, but most people aren't out to con everyone else when they get the chance and, if a spotlight is shone on the problem, will respond that actions should be taken to make things more just.
Here's an article calling out the stock trading specifically around Covid treatment drugs with some congressmen and politicians calling out the behavior:
https://www.nbcnews.com/politics/congress/aoc-calls-senate-i...
While not entirely related, I remember a study by the U.S. military during the Vietnam war that said the worst performing soldiers were the ones who were patriotic and served due to a sense of duty. I'm simplifying here but the idea was that those were often the first people to feel a sense of entitlement and feel as if because they had good intentions that they were "owed" something.
Belief in governance is cheap and doesn't do much to solve anything. Competency, skills, leadership, those are qualities that result in change... having a good heart and believing in or trying to execute various altruistic ideologies is basically a loser's game.
> It's easy to be a thorough cynic in the modern world...
Thanks to politicians it's never been easier!
Welcome to the system. This is pervasive in many other aspects as well (court, police, DA, etc).
Maybe an executive order could also prohibit this? I'm not sure.
I'm frankly disturbed that this kind of specific trading by people in power is going on at all. Salaried federal employees above a certain level are strongly encouraged to invest only in generic mutual funds to avoid even the appearance of conflict of interest. When I look at the above trades I'm not sure whether anything technically illegal occurred but I'd support making all specific trading illegal to avoid even the appearance of unethical behavior. Higher powers deserve to be held higher standards.
That sounds like an excellent idea to me. While in office, can only trade TSP funds, or their rough equivalents outside of TSP. If you wanna sell something that isn't a giant index fund? Do it before you take office.
Then I'd further support that all trading would have to be done via a 10b5-1 plan, with a blackout window of at least 6 months.
No system can prevent humans from exercising their basic instincts, emotions, urges, needs, and wants.
Well, those people profiting off of it would have to vote against each other's interests.
Money wins elections. Not issues, which are just window dressing. The media cartels own your attention for all your waking ours and, as MiB said, while individuals are rational and sensible, people (that is, the voting electorate) are easily scared, easily duped, and increasingly easily controlled.
So it's not just "vote against being rich", it's also "vote to lose the next election".
Liquid democracy is something that can be built from the ground up, and has the potential to deprecate our modern system.
https://www.warren.senate.gov/imo/media/doc/Anti-Corruption%...
Note that the house majority leader is also one of the biggest winner of these rules not existing.
If only there were more Ron Wydens and AOCs. But you see red states electing nutjobs who barely have high school degrees (Boeber) because they shout the loudest.
Also, one person’s “shouting nutjob with barely a highschool degree” is someone else’s “passionate populist who represents the common people.”
That is what average means.
(Looks like we two are keeping it balanced!)
The same goes for Republican representatives in highly red states.
I have family who just love to complain about what legislators are doing and how they're voting but have not once, ever, actually contacted their representative about these issues. Not once have they actually read the bills and tried to understand them. It's all based purely on whatever news channel they're watching. Yet, they somehow think that through all that complaining they're actually accomplishing something.
I know my family isn't unique in this. I was just talking to a contractor who is doing work on my house that started in on this nonsense.
It got too easy to see who’s flying their private jets and where.
Meanwhile if you travel by car, get bent.
I think we need to acknowledge that, in the same way that the people with the power to stop this are profiting, they are also the people with the power to change who is in power or how they get in power. Elections are not effective ways of changing systemic power structures anymore. Society pretty much needs an overhaul, especially in the face of serious existential risks like climate change or looming military conflicts.
https://ballotpedia.org/Initiative_and_referendum
https://en.wikipedia.org/wiki/Four_boxes_of_liberty
They are neither left nor right. There is a middle elite group that exploits politics on either side of the aisle to maintain power. And that's all it is. And they get filthy rich, but so too does the CCP which is left-wing. Taking advantage of power for personal gain is not an exclusive domain of one wing or the other. At any rate these oversimplified analogies break down among many lines upon closer inspection. There are elite insiders and then there's the rest of us.
> An amendment may be proposed and sent to the states for ratification by either:
> The U.S. Congress, whenever a two-thirds majority in both the Senate and the House of Representatives deem it necessary; or
> A national convention, called by Congress for this purpose, on the application of the legislatures of two-thirds of the states (34 since 1959). The convention option has never been used.
https://en.m.wikipedia.org/wiki/List_of_amendments_to_the_Un...
Who watches the watchmen?
And Democratic party believes that bigger gov't is the solution to many of our problems.
The recent Black Lives Matter protests have taken a far more aggressive turn against systemic issues. Systemic issues such as the economy, the stock market, policing as a whole, and capitalism in its essence. Donating to bail-out funds, joining the protests, increasing awareness in the problems our economic system has created for us without proper good-faith regulations is all helpful.
You can't reform corruption to this level. You need to cut it out and start over.
The industry generally sees it as easier to show compliance by having locked down personal trading by employees.
Usually this takes the form of - ETFs only, pre-clearance required, 30 day holding periods, limited to using only a list of 5 approved brokers.. and sometimes all of the above.
The restrictions apply not just to spouses but to anyone in household, and you have to attest you are reporting any holdings of say.. your parents, if you still live at home.
So the mother of a live-at-home college grad tech support analyst who plugs in phones at a bank has more trading restrictions than senior politicians :-)
And you need to grant them access to the broker data feed and no derivatives.
It's in part why I'm suddenly into crypto.
Can we please stop perpetuating the myth that short selling, or holding short positions, is some kind of exotic or shady or villainous activity ?
It's not. Short selling, and the holding of short positions, is value neutral and is part of a healthy properly functioning marketplace.
I don't know what politicians should or should not be doing but a long vs. short distinction is silly.
If they can invest in total market indices while having the ability to control the money supply, even if they can just go long, it doesn't matter.
What if we just regulated the 0.01% who's wealth is such that it makes the top elected officials in our country have a seemingly insignificant compensation.
They are plainly there to shove through their friends interests, profit off of insider information, and get out without going to jail. Every single one of them.
Here is, in particular, what they know: We as a whole despise Congress but somehow manage to convince ourselves that, "My representative is the only one who is honest!" so we re-elect them over and over again.
Here is another thing they know: the number of people I know personally who bitch and complain about issues based purely on headlines they've read or heard (note, it's ONLY the headlines. they can't be bothered to actually read the article) is, for me, astounding. In other words; the people don't want to do the work of really educating themselves and the politicians take advantage of that.
Let me say it again. Until we educate ourselves and demand that the people we elect be more accountable to us, the people, then they will. not. change.
If you take the DocID from the XML or TXT files in those sets you can send a request to:
- <doctype> works for the values "ptr" and "financial"- <year> self-explanatory
- <docid> the DocID from the entries in the XML or TXT files
Example: Nancy Pelosi disclosure/filing on 2021-04-09[1]
[0]: https://disclosures-clerk.house.gov/PublicDisclosure/Financi...
[1]: https://disclosures-clerk.house.gov/public_disc/ptr-pdfs/202...
This would be fun to play around with. I wonder if there's a better endpoint to source this from?
https://towardsdatascience.com/how-to-extract-tables-from-pd...
https://unusualwhales.com/i_am_the_senate/data
Looks like the report gets filed shortly after the trade.
[0]: https://unusualwhales.com/i_am_the_senate/data
https://www.sedar.com/
On the flip side, are there any congresspeople who have publicly put all their assets in a blind trust? Any who have advanced bills requiring this of their colleagues?
The solution to problems like this is elections, and you would think "My opponent is insider trading while I literally can't" would make a great campaign ad.