For many members of Congress the arrogance and sense of special entitlement that makes them superior to peasants like us knows no bounds.
Law violations that can send we little people to jail are ignored with impunity by our betters in Washington, D.C.
Today we’re talking about insider trading violations. This offense occurs when a corporate insider or just someone with access to knowledge, that’s not available to the general public, profits on that knowledge by buying or selling stock.
For a trader convicted of insider trading the least onerous penalty is a fine and being forced to disgorge the profits from the trades. The worst penalty is prison.
Stock prices can be affected by mergers, new product introductions, declining sales, increasing sales, scandals, and the health of the economy in general. Those are market influences.
Stock prices can also be affected by government investigations, new government regulations, new laws, new government contracts, the cancellation of government existing contracts and lawsuits filed by the government against a company.
Wise investors will be thinking, "Wow advance knowledge of those events would really help someone with that inside knowledge make profitable investment decisions!"
Which brings us to Congress:
In 2023 the S&P 500 (which is a list composed of the 500 largest companies listed on the New York Stock Exchange and is viewed as an indicator of the heath of the economy) was up 24%. That’s a significant gain and most of the time the S&P beats expert investors with its yearly returns.
Morningstar reports "For the 14th year in a row, the S&P 500 did better than the majority of actively managed U.S. large-cap stock funds."
Stock Analysis.com expands on this, "These are funds that actively buy and sell assets and are managed by professionals, often with very high salaries from the management fees. . . .
"According to this report, 88.99% of large-cap U.S. funds have underperformed the S&P500 index over 10 years."
That’s why we think you’ll find it more than suspicious when you learn courtesy of Yahoo Finance, "Thanks in part to some well-timed (maybe even suspiciously well-timed) trades, a third of the 100 members of Congress who reported financial transactions this year beat the S&P 500, which was up 24% in 2023, according to Unusual Whales, a stock and options news service.
"When broken out by party, Republicans earned an average of 18% returns on their trades, while Democrats earned 33%, according to the report."
We will pass over the irony of the socialists getting a higher return than the capitalists.
Democrat Brian Higgins was the winner with a 239% return. Followed by three Republicans — Mark Green, Garret Graves and David Rouzer — all with returns exceeding 100%. That year Nancy Pelosi, a consistent stock picker winner during her interminable career at the public trough, was up 65%.
How do they do it, you ask?
Remember what we said about insider trading?
Here’s what we mean, thanks again to Unusual Whales, "At times, elected officials traded in sectors that directly related to their work in Congress.
"Members of the House Oversight and Accountability Committee and House Armed Services Committee purchased health care and financial services stocks in more than one thousand transactions that directly related to their committees' work.
"The top performing traders (ahem — members of Congress) include notable names such as Rep. Nancy Pelosi, D-Calif.; Rep. Dan Crenshaw, R-Texas, up 38% and Sen. Susan Collins, R-Maine, up 55%. Rep. Brian Higgins, D-N.Y., notched the highest returns for 2023 at 238 percent."
This isn’t just sleazy. It’s criminal.
But . . . only for you. Not for them.
These so-called public servants aren’t even embarrassed by exploiting their inside knowledge.
Fortunately, not all members of Congress are morally adrift.
Sen. Josh Hawley, R-Mo., has introduced the delightfully named PELOSI Act.
Fox News reports, "the PELOSI Act, officially the Preventing Elected Leaders from Owning Securities and Investments Act, requires members and their spouses to divest any holdings or put them in a blind trust within six months of entering office."
Sen. Hawley, who won’t be running for U.S. Senate Majority Leader anytime soon explained, "Members of Congress and their spouses shouldn’t be using their position to get rich on the stock market."
Smart readers will be following the progress of this bill through the House and Senate.
If you learn your representatives didn't support the bill, you should ask them pointed questions at the next town hall you attend.
If they voted against the bill, it just proves Mark Twain was right again when he wrote, "There is no distinctly American criminal class - except Congress."
Michael Reagan, the eldest son of President Reagan, is a Newsmax TV analyst. A syndicated columnist and author, he chairs The Reagan Legacy Foundation. Michael is an in-demand speaker with Premiere speaker's bureau. Read Michael Reagan's Reports — More Here.
Michael R. Shannon is a commentator, researcher for the League of American Voters, and an award-winning political and advertising consultant with nationwide and international experience. He is author of "Conservative Christian's Guidebook for Living in Secular Times (Now With Added Humor!)" Read Michael Shannon's Reports — More Here.