Peter Schweizer, author of the 2011 book “Throw Them All Out,” said it’s still “very hard” to prove a member of Congress has engaged in insider trading despite the passage of the STOCK Act almost 10 years ago.
Schweizer called on Congress to ban lawmakers from buying and selling individual stocks.
“What they essentially did was loosen the law where it described insider trading,” he told the John Solomon Reports podcast. “It’s very, very hard now to prove that an elected official is engaged in insider trading. That part of the law is almost meaningless. And even as it applies to the frequency of disclosures, as you’ve pointed out, a lot of them just fail to file those reports.”
According to a recent NPR report, lawmakers on both sides of the aisle have failed to disclose stock purchases that they or their spouse made. Disclosure is required under the STOCK Act.
Schweizer noted that House Speaker Nancy Pelosi’s husband has purchased a great deal of tech stock this year. According to a Forbes report in July, Paul Pelosi made millions on “timely” bets on Big Tech stock purchases in advance of an antitrust bill stalling in the House. Retail traders are reportedly tracking Pelosi’s trades to decide which to buy.
“They still sort of continue to blatantly trade in stocks,” Schweizer said. “So in the case of the Pelosis, for example, she’s the Speaker of the House, legislation that’s going to affect Big Tech in a positive way or big contracts going to Big Tech, her husband’s not only buying and selling stock in Big Tech, he’s actually buying options, which are sort of leveraged bets that the stock is going to go one way or the other. And, of course, Paul Pelosi Sr. just happens to be really good at making those predictions.”
A “60 Minutes” special from 2012 on CBS News titled “Insiders: The Road to the STOCK Act” was largely based on Schweizer’s reporting.
Looking back to 2011 when his book on lawmakers’ stock trading was published, Schweizer said he noticed that lawmakers were making stock purchases in industries related to committees they were serving on in Congress.
“What I found, lo and behold, is that people sitting on the health committee were trading healthcare stocks when they were introducing legislation that was going to benefit those companies, and vice versa,” he said. “And that’s what really got me started. And the Pelosi material, I think, was some of the most explosive back in 2011. And lo and behold, it appears as if she is continuing to do similar sorts of things today.”
Pelosi files disclosure forms related to the stock buys that her spouse makes, which is one of the requirements in the STOCK Act. The website Capitol Trades tracks the stock purchases that members of Congress make, per their disclosure forms.
Schweizer said he sees a “second wave” of public concern about insider trading in Congress, but further action on the issue faces roadblocks.
“The problem remains inherently that we’re asking Congress to regulate themselves and this is a very powerful way for members of Congress to become wealthy,” he said. “The problem, to me, is they’re not really serious about it, because they don’t think it’s going to cost their jobs.”
Schweizer made several recommendations that Congress should follow to prevent insider trading.
“You need to ban the buying and selling of individual shares of stock,” he said. “There’s no reason members of Congress should be trading stocks or, specifically, stock options, which are leveraged bets like the Pelosis do. Let them buy mutual funds, but don’t let them buy individual stocks.”
He also said there should be a “searchable database” of the financial disclosure documents from lawmakers rather than scanned documents.