According to an April 9 filing with the House clerk, Paul Pelosi exercised call options and paid $1.95 million to buy 15,000 shares of Microsoft at a strike price of $130. The same day, he also paid $1.4 million for 10,000 shares, valued at $140 apiece.
Since he made the purchase, Microsoft's share price has risen by about 11 percent, from about $130 per share to roughly $255. This was in part due to the company securing a lucrative contract worth nearly $22 billion to supply the U.S. Army with augmented reality headsets for its troops.
The purchases are raising ethical questions, especially of whether Pelosi used insider knowledge to make the purchases.
On March 31, the U.S. Army announced that Microsoft had won a contract to build more than 120,000 custom HoloLens augmented reality headsets for its Integrated Visual Augmented System (IVAS). According to a Microsoft spokesperson, the contract could be worth up to $21.88 billion over 10 years.
Prior to this, the company had already entered into a $480 million contract with the Army to develop prototypes for IVAS.
A standard-issue HoloLens, which costs $3,500, gives wearers the ability to see "holograms" overlaid over real-world environments and interact with them using hand and voice gestures. Existing IVAS prototypes use similar technology to display things such as a map and compass to soldiers. It can even overlay thermal imaging to reveal people in the dark.
"The IVAS headset, based on HoloLens and augmented by Microsoft Azure cloud services, delivers a platform that will keep soldiers safer and make them more effective,” wrote Alex Kipman, a technical fellow at Microsoft and the person who introduced the HoloLens in 2015, in a blog post. "The program delivers enhanced situational awareness, enabling information sharing and decision-making in a variety of scenarios."
The IVAS deal is seen as making Microsoft a more prominent technology supplier for the U.S. military. Before it, the company had also secured a contract to provide cloud services to the Department of Defense, beating out Amazon, the public-cloud market leader.
The deal's importance has raised questions of whether Paul Pelosi used insider information from his wife to make his stock purchases. As noted by The Hill's Krystal Ball, as House Speaker, his wife may have had access to special information that could have informed Pelosi's decision to purchase the stock.
Paul isn't the only Pelosi who seems to have benefitted from insider knowledge. In December, the House Speaker herself purchased 25 call options of Tesla stocks, alongside other stock purchases. While seemingly innocuous at the time, the Biden administration's new agenda, focusing on environmental protection and combating climate change, could see Pelosi benefit financially from those purchases.
Indeed, while Pelosi purchased the call options at a stake price of $500 in December, Tesla's share price had risen from $640.34 to over $890 by the end of January. The call options, which were purchased for between $500,000 and 1 million, are now valued at $1.12 million. (Related: Pelosi's Capitol Police bill gaslights America.)
The Pelosis' trades are just the latest in a long string of cases where sitting members of Congress may have used inside knowledge to profit from the stock market. Last year, then Georgia Senator Kelly Loeffler was accused of insider trading and profiting off the Wuhan coronavirus pandemic after selling between $1.275 million and $3.1 million in stocks right after she was briefed on the virus's seriousness. The accusations against Loeffler were eventually dismissed in June 2020 by a Senate ethics panel.
Incidents like this and the Pelosis' trades have raised questions about the effectiveness of existing legislation meant to prevent this. The STOCK Act, which was passed after the 2008 financial crisis, attempted to prevent insider trading by making it illegal for government officials to trade stocks after receiving nonpublic information during the course of their jobs. But in light of the trades, some officials argue that the act did not go far enough.
Indeed, members of Pelosi's own Democratic party, including Sens. Elizabeth Warren and Jeff Merkley, have proposed legislation that seeks to ban members of Congress from making individual stock purchases.
Follow Corruption.news for more on possible insider trading being committed by the Pelosis and other members of Congress.