Texas Republican Congressman Dan Crenshaw’s recent online rebuke of the House’s massive continuing resolution spending bill has thrown insider stock trades once again into the limelight.
The row over representatives’ financial dealings in stocks their votes could affect sits again against the backdrop of Speaker Mike Johnson’s 1,500 page ‘continuing resolution’ spending bill that included a 40% pay increase for members of Congress and Obamacare opt-outs for sitting members.
If you wanna know the true number of inflation, just look at what percentage Congress is trying to give themselves a raise for. https://t.co/U4sieKxOvk
— The Redheaded libertarian (@TRHLofficial) December 18, 2024
Johnson had promised no Christmas omnibus spending bill, but for all intents and purposes, dressed it in the garb of a continuing resolution. The CR, liable to be killed by a social media crusade led by Elon Musk and Vivek Ramaswamy, includes eyebrow-raising pork:
What's in the new monster bill Congress is rushing to pass?
- $850k for a gay senior home
- $15 million to pay for Egyptian's college tuitions
- $400k for a gay activist group to teach elementary kids about being trans
- $500k for a DEI zoo
- $400k for a group to gives clothes… pic.twitter.com/sDcz8bgvMX— Jesse Watters (@JesseBWatters) March 22, 2024
Crenshaw’s viral tweets, and stock trades, as an advocate for Congressional pay raises, has thrown Congress’ financial dealings, again, into sharp relief against American citizens’ tax burden in the face of massive pork spending.
What are the rules on Congressional stock trading, and how are they different from others, such as business owners and c-suite executives?
Rules on congressional stock trading are notably more relaxed than for corporate insiders. Both are technically restricted from trading on non-public information. Notably, though, the timeline on reporting trades is starkly different: corporate insiders must disclose trades within two business days of the purchase or sale, whereas elected representatives have a full 45 days to report trades. Missing reporting deadlines comes with a hefty $200 fine, but are laxly enforced. And, if there are signs that enforcement of rules banning trades based on non-public information, they are few and far between.
Compared with countless corporate figures convicted of insider trading, two Congressional figures have been convicted of insider trading: Stephen Beyer, R-Ind., and Chris Collins, R-NY.
Would the public care about Congressional trades if retail investors could make the same moves as elected officials in real time? And, more importantly, do stock movers in representatives’ portfolios — or under their oversight — affect how they vote?
One would have to evaluate each vote, and parse each bill. Elected officials trade stocks and make money, neither of which are illegal — but their world-beating market returns have drawn notice from traders seeking to copy their moves, albeit on a six-week lag. If the smart money goes with Congress’ trades, there must be something there.
Online memes and jokes over officials’ ballooning net worth spawned new investment products for retail investors looking to trade on Congressional moves, and some have noticed how representatives make their moves:
First, lets take a look at Crenshaw
He made headlines for the timeline of his Meta Buy
- 10/24/22, buys shares in Meta $META for $137/share
- 4/17/23, pushes to get tiktok banned from officials
- 3/14/24, votes "yes" on bill to ban TiktokMeta is +352% since
To be fair, his… pic.twitter.com/I9TcI8MrnT
— Chris Josephs (@Chrisjjosephs) November 27, 2024
Figures like Chris Josephs, who cofounded Autopilot, a trading platform based on Congressional stock movers’ activity, have pointed out committee members’ conflicts of interest in trades:
At the time of the report
25% of the Energy & Natural Resources Committee traded $XOM or $CVX
33% of the Environment Committee traded oil-field services
8 members of the Armed Services Committee traded defense/aerospace stocks
This is clear conflicts of interest
— Chris Josephs (@Chrisjjosephs) November 27, 2024
Top movers in Congress include Rep. Nancy Pelosi, D-Calif., whose astounding $240 million net worth from a lifetime of public service has drawn notice. Among Michigan’s top traders is Rep. Debbie Dingell. She cracked the top-10 list of Congressional stock movers in 2022 with 7.1% returns. That year, 20% of Congressional traders beat the stock market, whereas about 10% of professional fund managers did. You can track her trades here. Congressman Dave Joyce in Ohio led the Buckeye State’s movers that year with 13% returns.
If those representatives’ 2022 returns seem small compared to 2024’s give-or-take 20% returns in the S&P, consider the S&P was down more than 19% in 2022. Members’ gains that year, it could be said, outperformed the market.
