NANCY Pelosi's businessman husband has been making headlines after he "won big on Alphabet and added bets on Amazon and Apple", claim reports.
Questions have been raised after Paul Pelosi, 81, was said to have "locked in $5.3million from Alphabet options".
Why is 'Nancy Pelosi insider trading' trending?
On June 11, the House Judiciary Committee kicked off a series of bills to limit the powers of tech giants including Apple, Amazon, and Google.
On July 6 2021, Fox Business wrote that Nancy's "husband placed a bet of up to $6million on Apple, Amazon and Google-parent company Alphabet ahead of a powerful House committee moving forward with bills aimed at reining in the powers of Big Tech.
The transactions were disclosed in a filing on Friday, July 2.
Bloomberg News revealed on July 7 that Paul "won big on Alphabet" and "added bets on Amazon and Apple "in the weeks leading up to the House Judiciary Committee's vote on antitrust legislation".
The website adds that in a financial disclosure signed by Nancy on July 2, "her husband reported exercising call options to acquire 4,000 shares of Alphabet, the parent company of Google, at a strike price of $1,200.
"The trade netted him a $4.8 million gain, and it’s risen to $5.3 million since then as the shares have jumped."
Forbes asks: "Did Paul… profit off of insider Beltway scuttlebutt in June to make about $5 million on options contracts tied to Alphabet’s stock?"
Paul didn't violate the STOCK Act unless he acted on nonpublic information, which seems unlikely, according to former Rep. Jill Long Thompson, D-Ind.
A spokesperson for Nancy Pelosi’s office said she "has no involvement or prior knowledge of these transactions… [and] does not own any stock."
"The story seems to be that he made one heck of a trade," says Forbes.
The article explains: "Left out in the Bloomberg piece is an important detail: Mr Pelosi had to make the trade.
"His options were set to expire on June 18, 2021, according to the disclosure report, the day when he exercised them.
"In fact, Pelosi only had two choices: Sell his options, or exercise them.
!If he did nothing, his brokerage would likely have closed or exercised the options anyway.
"Thus, Pelosi’s Alphabet trade on June 18 was an inevitability, whether the House subcommittee was meeting, or not."
What is insider trading?
Insider trading is the trading of a company’s stocks or other securities by people with access to confidential or non-public information about the company.
Taking advantage of this privileged access is considered a breach of the individual’s fiduciary duty, explains Cornell Law School.
Firms must report trading by corporate officers, directors, or other company members with significant access to privileged information to the Securities and Exchange Commission (SEC) or be publicly disclosed.
Federal law defines an “insider” as a company’s officers, directors, or someone in control of at least 10 per cent of a company’s equity securities.
Congress has criminalized these insiders’ use of non-public information.
That's because the use fraudulently violates a fiduciary duty with which the company has given the insider.
There are also problems when it comes to insiders “tipping” pals about non-public information that may influence the company’s publicly-traded stock price.
Friends do not fit in with the legal definition of an insider, so a problem arose regarding how to prosecute these people.
Today, though, a friend must not make a trade based upon that privileged information.
Failure to abide by these rules constitutes insider trading and creates grounds for prosecution.
The person receiving the tip, however, must have known or should have known that the information was company property to be convicted.
There is nothing unlawful about trading based on “material nonpublic information” about a company, explains The Hill.
In May 2021, the U.S. House of Representatives voted to pass a bill to explicitly prohibit insider trading.
The chamber passed the Insider Trading Prohibition Act in a procedural vote, with the case being put to the current Senate Banking Committee.
The legislation introduced in April would make it illegal for a person to trade while aware of non-public information that could reasonably affect the price of a stock.
This is particularly if that information was obtained by wrongful means including deceit, breach of an insider's fiduciary duty or hacking.
Without a law explicitly banning insider trading, the U.S. Securities and Exchange Commission and federal prosecutors have policed it using general fraud statutes.
That includes the Securities Exchange Act, forcing courts to confront increasingly complicated questions of what makes the conduct fraudulent.
Congress' attempts to outlaw insider trading date back more than 20 years.
What is Nancy Pelosi's net worth and how did she make her millions?
As House speaker, Pelosi earns $223,500 a year, which is more than a rank-and-file member, explains PolitiFact.
The website adds: "Pelosi hasn’t built a fortune from her government salary; most of it stems from her husband’s investments."
Her 2018 financial disclosure form showed that the Pelosis' assets were based on a mix of "real estate, partnerships and blue-chip stockholdings, including Apple, Facebook, Visa and Walt Disney Co."
PolititFact reckons her "maximum net worth is nearly $160million" after delving into her assets and liabilities in her portfolio.
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