Pelosi and Boehner Deny Profiting from Insider Information
House Minority Leader Nancy Pelosi (D-CA) and Speaker John Boehner (R-OH) denied allegations that they made investment decisions based on information unavailable to the public. Following a Nov. 13, 2011 60 Minutes report, several other members of Congress have come under attack for allegedly using insider information for personal gain.
The report examines Pelosi and her husband’s purchase of 5,000 shares of Visa stock on Mar. 18, 2008 as legislation threatening credit card companies made its way through the House. They purchased the stock at $44 per share, and it was worth $64 per share three days later. The credit card legislation never reached the House floor. The report drew upon work from noted conservative Peter Schweizer of the Hoover Institution, whose book Throw Them All Out was released Nov. 15, 2011. “It is very troubling that ’60 Minutes’ would base their reporting off of an already-discredited conservative author who has made a career of out attacking Democrats,” Pelosi’s spokesman Drew Hammill said in a statement.
Boehner was among the members of Congress trading health care stocks during 2009’s healthcare debate. He led the opposition against a public option which would establish a government insurance option to compete with private companies. Boehner purchased health insurance stocks, all of which made money, days before the public option was killed. When asked about insider trading allegations at a press conference earlier this month, Boehner said, “I have not made any decisions on day-to-day trading activities of my account and haven’t for years. I do not do it, haven’t done it and wouldn’t do it.”
Rick Perry was the first presidential candidate to respond, saying in a Nov. 14, 2011 video, “Congress certainly can’t be trusted to watch our money, and now it’s clear they can’t be trusted with theirs. Any congressman or senator that uses their insider knowledge to profit in the stock market ought to be sent to jail. Period. And Congress ought to pass a law that says so right now. No ifs, ands, or buts.”
The US Senate and the US Supreme Court are the only two out of 975 federal entities that appear to have no rules and no laws prohibiting them from trading stocks based on nonpublic information they gain on the job. While the US House of Representatives Ethics Manual states that its members should “never use any information coming to him confidentially in the performance of governmental duties as a means for making private profit,” it currently remains legal to do so.
“In the past few years a whole new totally unregulated, $100 million dollar industry has grown up in Washington called political intelligence. It employs former congressmen and former staffers to scour the halls of the Capitol gathering valuable non-public information then selling it to hedge funds and traders on Wall Street who can trade on it,” 60 Minutes reports.
Rep. Louise Slaughter (D-NY) and Rep. Brian Baird (D-WA) introduced legislation in 2006 to ban insider trading in Congress. The Stop Trading on Congressional Knowledge (STOCK) Act went from nine House cosponsors before 60 Minutes aired, to 18 cosponsors by the following day. Senator Scott Brown (R-MA) filed the STOCK Act in the Senate on Nov. 15, 2011.
Carolyn Lochhead, “Pelosi Denies Insider Trading Allegations,” www.chron.com, Nov. 14, 2011
“Congress: Trading Stock on Inside Information?,” www.cbsnews.com, Nov. 13, 2011