Paul Pelosi’s Alphabet trades scrutinized amid DOJ antitrust suit
Yahoo Finance’s Rick Newman joins the Live show to discuss whether concerns around insider trading are warranted after Paul Pelosi sold stock ahead of the DOJ’s antitrust suit against Google parent company Alphabet.
RACHELLE AKUFFO: All right, well, in the wake of the US Justice Department antitrust suits against Google, Paul Pelosi's Alphabet trades are coming into focus. The millionaire husband of former House Speaker Nancy Pelosi sold his Alphabet shares prior to the DOJ announcement. Now, the Pelosis have previously denied any misconduct, but other lawmakers are taking aim at the congressional couple's stock trading.
Yahoo Finance's Rick Newman has the details. And Rick, we know that this has a lot of-- it's a political football that they like to toss around.
RICK NEWMAN: Oh yeah. So on the surface, you could I guess infer that perhaps Nancy Pelosi got word of the Justice Department lawsuit against Google, the antitrust suit, and told her husband, who's a wealthy investor. And he said, oh, I'm going to take advantage of this insider information and sell my shares before this news becomes public. And therefore, either make money or avoid a loss.
That is not what exactly happened, however. If you look at the timing of everything in question here, Paul Pelosi sold his Alphabet shares-- that's the parent company of Google-- at a couple of points at the end of December. And Google shares have actually gone up since then. They're up by about 8%, even though they did fall back a bit on the news of the antitrust lawsuit.
So if Paul Pelosi is using insider information to make money, he's actually a very bad insider trader because Google's price has actually gone up, not down since he sold his shares. You know, this is a big thing on Fox Business and Fox News. They're saying, oh look, here's evidence that the Pelosis are-- you know, the game is rigged in favor of the Pelosis. But all you have to do is look at a stock chart for Alphabet and say, wow, it doesn't really add up that way.
RACHELLE AKUFFO: So then, Rick, given that then, what is the outlook for congressional stock trading? And is there even an appetite for a ban? I know some Reddit users have compared it to a bear voting to ban salmon. Is this something that they actually want right now?
RICK NEWMAN: Well, this is going to go nowhere anytime soon. I mean, there are periodic calls for a ban on congressional stock trading. And it gets complicated because then you have to say, well, you can ban the members themselves-- that's 535 members of both houses of Congress. You can ban them from trading individual stocks.
But what about family members? Would that have to extend to spouses? What about children? What about in-laws? And you get into this whole can of worms where OK, you could ban trading by the members, but what about family members? And how far do you go?
So if members really did have inside information that they could make money on, there'd still be a way to do that. Because somewhere down the chain, somebody-- they could pass the information on and somebody could trade it. So this comes up every now and then. It's one of those things that sounds good in principle, but it's hard to execute.
If you did actually ban trading in individual stocks by members of Congress, you could still allow them to trade ETFs or mutual funds the way most ordinary investors do. And while there wouldn't be the chance to make bets on individual companies, they, you know, they could still get-- you know, capitalize on the gains in the stock market over time. So that's a plausible way forward.
Let's remember we have a divided Congress right now. And Democrats couldn't pass this when they had control of Congress and Republicans couldn't pass a stock trading ban when they had control of Congress. So there's no reason to think it's going to happen.
RACHELLE AKUFFO: I mean, that's true because I think it was back in 2020, a Democratic Congresswoman, Ocasio-Cortez, also tried to put this forward. It didn't get traction. So interesting now to see it then flip to the other side and still not getting any traction. Are we going to just keep kicking this can down the road?
RICK NEWMAN: Yeah. This is not going to pass any time soon. It's just one of those soundbite things, Rachelle, where, you know, Josh Hawley-- Josh Hawley, the, you know, the ambitious Senator from Missouri, has proposed legislation that has an acronym that when you put it together spells PELOSI. So he calls it the PELOSI Act as if Nancy Pelosi is the, you know, the sort of face of villainy on this one.
Yeah, that's cheap. She happens to be married to a wealthy investor. It is still illegal to trade on inside information if you're a member of Congress. And they're having some investigations into cases that looked as if some member of Congress did get information.
I think if you look into Richard Burr of North Carolina, there were some suggestions that he got information leading up to the COVID pandemic that he knew that we were going to be facing a pandemic before the rest of the public did and he may have traded on that. There was an investigation. I don't think it went anywhere, but it was bad publicity for him.
There have been a couple instances of members of Congress actually getting prosecuted for trading on inside information. So you're not allowed to trade on inside information. But of course, it's hard to show that anybody does.
So I think this is just going to be a soundbite issue for members of Congress here and there who want to gain some political points. But it's not going to-- I don't see any pathway to this becoming actual legislation that can pass.
RACHELLE AKUFFO: It certainly seems that way. Rick Newman, thank you so much for that update for us.