Former Speaker of the House Nancy Pelosi made a 203 percent return on an investment in Visa, the credit card company. She and her husband Paul were able to buy between $1 million and $5 million (congressional members only have to disclose a purchase range) of a Visa initial public offering (IPO). In early 2008, she was given the opportunity to buy into the Visa IPO, a nearly impossible feat that average citizens could almost certainly never achieve. The majority of IPO purchase opportunities go to institutional investors, large mutual funds, or pension funds.
While Pelosi complained about credit card companies, on March 18, 2008, she bought Visa stock at $44 per share, the IPO price. Two days later, the price rose to $65 per share, a 50 percent profit. She bought Visa stock two more times. By her third purchase on June 4, 2008, Visa stock was worth $85 per share.
How, some may ask, did Nancy Pelosi get in on one of the most valuable IPOs in history? Corporations wishing to have congressional allies will occasionally pick members of Congress to receive IPOs. Pelosi received her Visa IPO almost two weeks after a potentially damaging piece of legislation for Visa, the Credit Card Fair Fee Act, had been introduced in the House. Coincidence?
If the Credit Card Fair Fee Act had been passed, it would have amended antitrust laws and required credit card companies to negotiate with merchants over interchange fees that credit card companies charge merchants when customers use the cards. Further, it would have given the Justice Department and the Federal Trade Commission the power to arbitrate credit card company and merchant disagreements. Pelosi eventually supported a bill, the Credit Card Reform Act. The interchange fees were unaltered in that bill, and the bill mandated that the interchange fee should be “studied.” Bottom line: credit card companies dodged a potentially costly bullet.
In December 1999, Pelosi purchased shares of a company, OnDisplay. A few months later, OnDisplay was bought by Vignette, resulting in up to $1 million in capital gains for Pelosi. What was unusual about the transaction is that Vignette’s IPO was underwritten by a major campaign contributor and longtime friend of Nancy Pelosi. Another coincidence?
In at least ten IPOs throughout her career, Pelosi has been “very lucky.” In 1993, Pelosi bought IPO shares in Gupta. The stock price rose 88 percent in one day, and she sold the stock the next day. Pelosi did the same thing with Netscape and UUNet, doubling initial investment in one day. Other IPO one day holds included Remedy Corporation, Opal, Legato Systems, and Act Networks. In November, 2007, Pelosi bought $500,000 in the IPO for Quest Energy Partners, a natural gas company. She then supported legislation that benefited Quest Energy. When asked about her investment, she shrugged and said, “That’s the marketplace.” Yet another coincidence?
All this activity from Nancy Pelosi, who said in an interview with NBC’s Brian Williams on November 8, 2006: “Drain the swamp means to turn this Congress into the most honest and open Congress in history. That’s my pledge, that is what I intend to do.”
In the spirit of fair play, both House Speaker John Boehner and Republican Rep. Spencer Bachus of Alabama have also had their investments investigated. Please read the aforementioned source for results. And, yes, this source quotes 60 Minutes, defended in comments from another post, so I encourage you to read the sources provided, then reach your own conclusions.
But that’s just my opinion.Powered by Sidelines