Paul Pelosi bought the shares on January 17 at $1600 per share, according to financial disclosure filings. As of Friday morning, the share price of Amazon had risen to $3000. In addition, he held 40 call options on Amazon stock that he also sold on the same day, earning between 500,000 and $1 million.
Call options are contracts that let investors buy certain stocks at a particular price up to a certain date. He made a purchase a day before his options were set to expire. Shares of Amazon generally moved in the same direction as the overall stock market in the months that followed, dropping as low as $1626.03 on March 16 when pandemic-related shutdowns hurt the stock market significantly. However, by the end of June, shares were trading at almost $2800 per share, seriously outpacing the market as a whole.
The move conveniently came right before the nation was locked down and many in-person retailers were forced to close, prompting people to make their purchases online on sites like Amazon in droves.
Paul Pelosi is no stranger to controversy. The businessman and venture capitalist was also involved in a scandal when he bought 5000 shares of Visa stock during the credit card company’s initial public offering in 2008. Two days after the IPO, the stock price rose by 45 percent as Congress mulled new credit card regulations.
Just five months later, Congress passed a bipartisan act known as the Stop Trading On Congressional Knowledge, or STOCK, act. It prevents lawmakers from using insider knowledge to trade stocks. A provision commonly referred to as “The Pelosi Provision” was added to stop government officials from getting special access to IPOs.
Although Pelosi’s camp claims that she wasn’t briefed on coronavirus until January 29, it was already becoming clear where the virus was headed. They’ve also said that Nancy Pelosi does not personally own any stock in the company. Nevertheless, she is required by law to disclose her husband's transactions. According to her disclosure, he spent $4.8 million on 3000 shares at $1600.
FBI insiders told the Thomas Paine podcast that the FBI had been interested in looking into the move, but they weren’t given the go-ahead by Attorney General William Barr.
One lawmaker who is under investigation for similar behavior, however, is Senator Richard Burr (R-NC). Senator Burr sold off up to $1.72 million in holdings in 33 different transactions on February 13.
Burr is the head of the Senate Intelligence Committee, which gives him access to classified information about potential threats to the nation. Just before selling his stocks, he and his committee were getting daily briefings about the coronavirus outbreak. A week after the sale, the stock market started a decline that has led to the biggest losses seen since the market crashed in 1987.
Some of the stocks he sold were from companies that were highly vulnerable to outbreak-related shutdowns, like Wyndham Hotels and Resorts, whose stock lost two thirds of its value in the outbreak. He also sold shares of Extended Stay America, whose shares have dropped by half. It’s interesting to note that Burr was one of just three senators who opposed the STOCK Act in 2012.
In the Pelosi case, although there are some questions about the timing of the sale and how much she might have known at the time, it’s understandable that a lot of people are viewing the move with a skeptical eye considering that her and her husband’s behavior actually prompted a provision to an insider trading bill. This is something that absolutely should be investigated, and they both need to be held accountable if they used non-public information to profit privately.
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