Venture capitalist Chamath Palihapitiya has sparked controversy by asserting that former House Speaker Nancy Pelosi's consistently high stock market returns are the result of a regulatory exemption that allows members of Congress to trade on non-public information.
In a recent episode of the All-In Podcast, Palihapitiya argued that Regulation Fair Disclosure (Reg FD), which prohibits companies from selectively disclosing material information to certain investors, does not apply to members of Congress. This, he claims, gives Pelosi and other legislators an unfair advantage in the stock market.
"Nancy Pelosi's returns are so good because Reg FD does not apply to people in Congress," Palihapitiya said on the show.
Reg FD, enacted by the Securities and Exchange Commission in 2000, requires that when a company discloses material non-public information, it must do so publicly to all investors simultaneously. However, Palihapitiya notes that members of Congress are not explicitly bound by this rule, allowing them to potentially trade on information gleaned from their legislative work.
Pelosi, a California Democrat, has long faced scrutiny over her and her husband's stock trades. Her net worth has reportedly grown significantly during her tenure, with many trades outpacing the market.
Palihapitiya's comments have reignited the debate over stock trading by members of Congress. The STOCK Act, passed in 2012, requires lawmakers to disclose trades, but critics argue it lacks enforcement and fails to prevent insider trading.
"It's a loophole that needs to be closed," Palihapitiya added. "If you're making laws that affect the market, you shouldn't be able to trade on that information before the public knows."
The episode, titled "OpenAI's Identity Crisis, Datacenter Wars, Market Up on Iran News, Mamdani's First Tax, Swalwell Out," also covered other topics, but Palihapitiya's remarks on Pelosi's trading have drawn particular attention.