Insider trading has a controversial history in the US, especially regarding government officials. While most people think of corporate insiders when they hear insider trading, politicians have often used their access to sensitive information for profitable trades, sparking concerns about transparency and ethics. In this guide, we’ll go through the top 10 largest stock trades in the US government.
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What is insider trading?
Insider trading refers to buying or selling stocks based on confidential information unavailable to the general public. When government officials trade stocks, they potentially use inside information gained from their positions, which gives them an advantage over regular investors. While some instances of government-related insider trading are legal, the optics raise questions about fairness and integrity.
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In the past, Congress and federal officials have had the privilege to trade stocks, but public scrutiny and criticism have led to legal changes over the years. In 2012, the US passed the Stop Trading on Congressional Knowledge (STOCK) Act, aiming to prevent insider trading by members of Congress and federal employees. However, certain loopholes and minimal enforcement mean insider trading remains a hot topic.
Key insider trading terms
Before we go any deeper, it’s key to quickly go over the list of most common terms regarding insider trading. These include:
- Non-public information: Confidential information not available to the public;
- Insider: A person with privileged access to company information, like an executive or a public official;
- STOCK Act: A law requiring government officials to report stock transactions, aiming to prevent insider trading.
Top 10 largest stock trades by US government officials
Now that we have briefly explained what insider trading is and mentioned the STOCK Act, let’s explore the top 10 largest stock trades in the US Government, which, due to their size, timing, and the public attention and controversy they stirred, have raised questions about possible conflicts of interest.
- Nancy Pelosi and the tech sector: The former Speaker of the House, Nancy Pelosi, has often been scrutinized for her husband’s significant trades in major tech companies like Apple (NASDAQ: AAPL), Meta (NASDAQ: META), and Nvidia (NASDAQ: NVDA), with millions invested. In July 2024, Paul Pelosi, Nancy Pelosi’s mentioned husband, sold between $500,000 and $1 million worth of Visa (NYSE: V) stock. This sale occurred less than three months before the Department of Justice filed an antitrust lawsuit against Visa, alleging monopolistic practices in the debit card market;
- Richard Burr’s stock dump: In February 2020, Senator Richard Burr sold between $628,000 and $1.72 million in stocks across 33 transactions. These sales took place shortly before the COVID-19 pandemic led to a significant market downturn, raising concerns about potential use of non-public information;
- Kelly Loeffler’s trades pre-COVID: Former Senator Kelly Loeffler and her husband sold millions in stocks following a private Senate briefing on COVID-19 in January 2020. They offloaded shares in companies likely to be affected by the pandemic and invested in sectors that could benefit, such as telecommuting technologies;
- Dianne Feinstein’s investment in biotech: Senator Dianne Feinstein’s husband sold between $1.5 million and $6 million in biotech stocks in January and February 2020. These transactions occurred after a closed-door Senate Health Committee briefing on the coronavirus, leading to scrutiny over potential conflicts of interest;
- Tom Malinowski’s medical stocks: Representative Tom Malinowski failed to disclose dozens of stock trades worth at least $671,000 in medical and tech companies between January 2019 and March 2020. These trades, made during the early stages of the pandemic, raised questions about compliance with disclosure requirements;
- David Perdue’s defense contracts: Senator David Perdue made significant stock purchases in a company that held government defense contracts. Between 2017 and 2019, he conducted 61 transactions in BWX Technologies (NYSE: BWXT), a contractor for the US Navy, totaling between $1.8 million and $6 million. These trades coincided with his work on the Senate Armed Services Committee;
- Jim Inhofe’s financial maneuvering: Senator Jim Inhofe sold between $180,000 and $400,000 in stocks in January 2020, including shares in companies like PayPal (NASDAQ: PYPL) and Apple. These sales occurred after a Senate briefing on the coronavirus, prompting questions about the timing and potential use of insider information;
- John Roberts and real estate holdings: Chief Justice John Roberts has reported holdings in real estate investment trusts valued between $250,000 and $500,000. While not directly involved in stock trading controversies, his investments in companies with government contracts have been noted in discussions about potential conflicts of interest;
- Wilbur Ross and his interests in shipping: As Secretary of Commerce, Wilbur Ross retained investments in shipping companies, including Navigator Holdings (NYSE: NVGS), valued between $2 million and $10 million. These holdings raised concerns about conflicts of interest, given his role in trade policy decisions affecting the shipping industry;
- Elaine Chao and construction companies: Former Secretary of Transportation Elaine Chao held shares in Vulcan Materials, a construction materials company, valued between $250,000 and $500,000. Her position overseeing infrastructure projects led to scrutiny over potential conflicts of interest related to her investments.
How to track insider trading?
With insider trading being so sensitive, tracking it requires specialized tools. Investors and journalists rely on various resources to follow trades by the US Senate and Congress officials and corporate insiders.
One of the go-to tools for tracking all trades made by US Congress and Senate officials is Finbold Signals. It provides real-time updates on stock trades, allowing users to track insider trading activities among government officials, corporate insiders, and even high-profile politicians.
Receive Signals on SEC-verified Insider Stock Trades
This signal is triggered upon the reporting of the trade to the Securities and Exchange Commission (SEC).
How insider trading regulations affect government officials
Though the STOCK Act was a major step forward, its limitations make it difficult to enforce strict insider trading policies. Like most acts, it’s full of weaknesses, and the ones that draw the most attention are:
- Weak penalties: Fines are low and don’t necessarily deter high-income officials;
- Disclosure delays: Public disclosure of trades can take up to 45 days, by which time the market impact of these trades often fades;
- Complex reporting: The STOCK Act requires specific reporting procedures, which many officials reportedly struggle to follow accurately.
| Regulation | Year enacted | Main provisions | Criticism |
| STOCK Act | 2012 | Mandates stock trade disclosures from federal officials | Weak penalties, delayed disclosure |
| Ethics in Government Act | 1978 | Requires asset disclosures from officials | Loopholes allow some trades to go unreported |
| Sarbanes-Oxley Act | 2002 | Broad anti-fraud law affecting corporate trading practices | Limited applicability to government officials |
How do large trades get attention?
Here are some common triggers that bring large trades under public scrutiny:
- Timing of the trade: When trades coincide with major events, such as a pandemic or policy change;
- Volume of shares: Large transactions that suggest a significant stake in a company;
- Type of company: Companies closely affected by government policy or contracts, especially in defense, healthcare, and tech.
Congressional insider trading during the COVID-19 pandemic
In early 2020, as COVID-19 began to spread globally, a congressional insider trading scandal erupted, putting the spotlight on several US lawmakers.
Both Republican and Democrat Senators and representatives faced allegations of selling large amounts of stock just before the pandemic caused a market crash. These officials had received closed-door briefings about the severity and potential impact of the virus on the US, prompting concerns that they used non-public information to avoid financial losses.
Among the most scrutinized trades were those by Senators Richard Burr, Kelly Loeffler, and Dianne Feinstein, who each made substantial transactions following confidential briefings.
A study by Thomas Bauer explored the trading activities of US Representatives during the COVID-19 pandemic. The study analyzed whether US lawmakers used non-public information to gain financial advantages by examining their stock returns during the crisis. Bauer investigated the timing and outcomes of their trades to determine if members of Congress benefitted from insider knowledge before the general public.
Bauer’s findings suggest that while some trades have raised public concern, there may not be conclusive evidence that insider trading was prevalent among lawmakers during this period.
“This thesis finds little evidence of widespread insider trading in the US House of Representatives during the COVID-19 pandemic.”
The bottom line
Insider trading in government raises key questions about fairness and trust. While regulations like the STOCK Act aim to increase transparency, certain gaps remain, and the public’s engagement is key to holding officials accountable. Nevertheless, tracking tools like Finbold Signals can provide you as an investor with the ability to stay informed and follow major movements by big players like US politicians.
Receive Signals on SEC-verified Insider Stock Trades
This signal is triggered upon the reporting of the trade to the Securities and Exchange Commission (SEC).
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
FAQs
What is insider trading?
Insider trading involves buying or selling stocks based on confidential information not available to the public. When government officials trade stocks based on inside information gained from their roles, it creates an unfair advantage over regular investors and can undermine public trust.
What are the regulatory rules for insider trading?
The Stop Trading on Congressional Knowledge (STOCK) Act of 2012 requires government officials to disclose their trades within 45 days. However, critics argue that its penalties are weak, and delayed disclosures make it difficult to prevent potential abuses.
Is the US government allowed to buy stocks?
Yes, government officials are permitted to buy stocks, as long as they follow regulations. However, they must disclose their trades within 45 days under the STOCK Act, and avoid trading based on insider information that isn’t available to the public.
What is the STOCK Act?
The STOCK Act mandates disclosure of trades made by Congress members and other federal employees to prevent insider trading. While it’s a significant step toward transparency, limited penalties and delays in reporting have raised questions about its effectiveness.
Who enforces the STOCK Act?
The US Office of Government Ethics (OGE) oversees compliance with the STOCK Act for executive branch officials, while the US House and Senate Ethics Committees handle enforcement for Congress members. These bodies review trade disclosures, though enforcement has been criticized for its limited effectiveness and light penalties.
What is the best politician insider trading tracker?
Finbold Signals is one of the best tools to track politician stock trading, as it provides real-time updates on stock trades by government officials, corporate insiders, and high-profile politicians.
What are some examples of insider trading in Congress?
Some major examples include significant trades by Senator Richard Burr, who sold stocks before COVID-19 affected the markets, and Senator Kelly Loeffler, who sold millions in stocks after a confidential COVID-19 briefing.
Can government officials use insider knowledge to trade stocks?
No, using insider knowledge to trade stocks is illegal for government officials, just as it is for corporate insiders. However, enforcement challenges make it difficult to prove when officials use confidential information to make trades, so controversies still arise.
How do large stock trades by government officials get flagged?
Large trades typically attract attention if they coincide with significant policy events, involve high share volumes, or include companies closely tied to government actions, such as defense or healthcare.
