Insider trading is rampant during the current generation like never before. One of the prominent scandals regarding insider trading that is currently taking place is the Nancy Pelosi scandal. Pelosi has been under fire for a few years now due to her high R.O.I. Everything just sounds too fishy. How can one person trade stocks and do so successfully, always managing to outdo the S&P 500? There is only one answer possible here: Insider Trading. It raises the question as to whether Pelosi is nothing more than a public fraud. She has come out on television claiming not to have traded any stocks based on insider information.
What is the Stock Act of 2012? Any time a member of Congress or one of their relatives buys or sells a stock, it must be disclosed in 30 days after the transaction date. What is the significance of such a rule? The significance is in ensuring transparency to demonstrate that the politicians are not cheating their way to become rich. The problem with this rule is significant. The Stock Act seems like a good rule which would help prevent the rich from becoming even richer. However, most people do not comply with this rule and report very late. They just pay a tiny fine of $200 and continue doing what they were doing before the passage of the rule.
According to the analysis carried out by Market Sentiment(9000 trades analyzed), Congress managed to outperform the S&P 500 in just one month by more than 1.2%. And only recently Pelosi was able to make three times the S&P 500. This insider trading gives Pelosi an amazing 56% ROI. More research suggests that even Paul Pelosi benefits from insider trading. Paul Pelosi on 12/17/21 purchased 10 call options of Alphabet Inc - Class C Capital ($500,000-1,000,000). It needs to be mentioned that 1 call option=100 shares and this means that it is the right to buy the stock in the future for the predetermined price. Investing in 10 call options is a huge risk and it means that they think that Alphabet Inc (Google) will be doing great. How did they figure it out? Insider Trading.