Honest hard working Americans and the Occupy America activists should take pleasure and motivation from the House passage of the Stop Trading On Congressional Knowledge (STOCK) Act, designed to curtail insider trading by lawmakers. A factor in the passage of the important bill was a report on CBS Sixty Minutes last fall that singled out California Democrat and Minority Leader of the House of Representatives, Nancy Pelosi as one who has profited.
Pelosi has served in Congress since 1987. The Sixty Minutes report focused on a book,Throw Them All Out, by Peter Schweizer which documents how often the investments of members of Congress coincide with knowledge they obtain on the job. Senators and representatives are often found to have annual incomes in excess of seven figures, which in many cases are unexplained and which may be located in blind trusts or in offshore accounts such as those offered by Swiss banks as well as by banks in other countries.
The version of the bill passed in the House, sponsored by Reps. Tim Walz, (D-Minn.) and Louise Slaughter (D-N.Y.) prohibits members of Congress and other federal employees from making investments based on nonpublic information obtained in the course of their public service work. In addition it places restrictions on the political intelligence industry; firms on which hedge funds rely to obtain non-public information available in Washington. Similar legislation was introduced in the Senate and approved by a 96-3 vote on February 2.
The law firm Covington & Burling has told its clients that hedge funds that contact congressional staff members to determine prospects of legislation may be required to register. Also facing a likelihood of required registration are companies that contact sources in Congress or regulatory agencies about expected government response to mergers and acquisitions. The law firm said, “The effect of these changes would be quite significant for the business community.”
Pelosi was specifically named by critics at CBS, who refer to profiting by her husband based on insider awareness that Visa was becoming a publicly traded company in October of 2006. The spouse of the House minority leader is said to have bought the stock at about $44 a share. In a few short days, following the announcement that Visa was to go public, the value of the stock rose to about $60 a share. The Pelosi profit was about $80,000. At that point Pelosi bought two more blocks of the issue, and more still on later dates; March 25, 2008 (10,000 shares at $64) and on June 4 (5,000 shares at $86), resulting in a holding of nearly $1.3 million in shares.