The U.S. Senate is slated to vote on multiple bills this week after an Independence Day weekend recess. One of those votes has to do with semiconductor chips. The bill is intended to provide over $50 billion in subsidies for the computer chip industry. Senate Majority Leader Chuck Schumer has said that the vote “is a matter of national security” as it will help to preserve jobs in the United States. The bill is intended to boost American competition with China, who is one of the world’s largest manufacturers of semiconductor chips.
Should the bill pass on Tuesday, it would later go to the House of Representatives for approval. If the House gives the bill a nod, it would then be sent to the Oval Office for President Joe Biden’s signature.
Certainly, most Americans would likely welcome the manufacture of semiconductor chips – something integral to the operation of cell phones, televisions, household appliances, and particularly vehicles. One reason that the auto manufacturing industry was unable to supply vehicles to the American consumer had a great deal to do with the pandemic and a lack of semiconductor chips. This contributed greatly to a jump in the price of both new vehicles as well as used vehicles over the past two years. As recently as February, CNET.com reported that there was still a shortage.
Business Insider reported late last week that Paul Pelosi had bought between $1 million and $5 million in NVIDIA stocks. NVIDIA is the company that invented and developed the GPU, and the company is currently known for its development of artificial intelligence hardware and software.
In keeping with regulations for members of Congress, Speaker of the House Nancy Pelosi reported that her husband, Paul, had made purchases of NVIDIA stock – as well as sold off shares in Visa and Apple. Paul Pelosi made these transactions in June 2022.
When the news broke about Paul Pelosi’s stock activity, many critics called it “insider trading.” But, is what Pelosi did truly insider trading? The Oxford Dictionary defines insider trading as “the illegal practice of trading on the stock exchange to one’s own advantage through having access to confidential information.” Martha Stewart served time in federal prison for her involvement in an insider trading scandal. What makes Paul Pelosi’s trading different, if it is?
First, Nancy Pelosi herself has not traded the stocks. Yet, she is married to a man who does. Business Insider reports that the Pelosis are worth over $46 million. Pelosi’s colleagues have called her “the ultimate insider.” Currently, there is a law on the books called the STOCK Act (Stop Trading on Congressional Knowledge). Signed into law in 2012, this law would prevent members of Congress from using confidential knowledge gained from their position to make decisions on trading stocks.
However, supporters of Pelosi say that the impending vote on semiconductor chips was made public; therefore, Pelosi has done no wrong. She also reported her husband’s stock activity as required.
Martha Stewart was convicted of obstruction of justice and conspiracy charges rather than insider trading. She was allegedly given advice to sell off stock in the ImClone company one day before the FDA announced they would not be giving approval to the experimental cancer drug. Stewart said she had an agreement with her broker to sell if the stock fell below a certain price; her broker’s assistant said that the broker was instructed to inform Stewart of any insider tips he might have.
Pelosi bought the NVIDIA stock in June 2022 before the last Congressional recess. He also sold off a great deal of Apple and Visa stock.
Pelosi’s spokesperson told Fox News: “The Speaker has no prior knowledge or subsequent involvement in any transactions.”
Even if Pelosi suspects how a vote will go – and when it will take place – a Congressional vote may offer a bump or loss in stock prices. However, this isn’t a guarantee; the failure of the FDA to approve a particular medicine could have a devastating effect on the stock price of a company. Again, Martha Stewart was never convicted of insider trading, although the media made it seem as if she did.
Unfortunately, the Pelosis’ actions fall into a gray area. Some may see the stock purchase as unethical, but it is not illegal. Pelosi filed the proper paperwork, and the vote is in the Senate, not the House. Until Congress delineates what IS illegal and insider trading regarding members on Capitol Hill, Pelosi has done no wrong.