US House of Representative Speaker Nancy Pelosi.(Reuters)
Speaker of the US House of Representative and California representative, Nancy Pelosi has purchased 25 call options of Tesla Inc. The same purchase has now come under the radar, as it stands to benefit from the new Joe Biden administration.
According to a report, Pelosi or her husband Pual, who runs a venture capital firm purchased options of Tesla at a stake price of $500 and the expiration of March 18, 2022.
Pelosi paid between $500,000 and $1,000,000 for the options.
The shares of Tesla have risen from $640.34 at the time when the calls were purchased to $890 today. As of January 27, they were valued at $1.12 million.
Why is this important?
The above purchase of is questionable as it could be argued that Tesla stands to benefit from new President Joe Biden’s administration.
Biden has significantly supported electric vehicles and its purchase. His administration could even lift the cap on sales, giving buyers tax credits again, which in turn becomes an advantage for the car maker. The President has suggested programmes that could incentivise customers for trading in used vehicles towards the purchase of an electric vehicle.
Now Speaker Pelosi could face conflict as she works to pass clean energy initiatives from which her family could profit.
Bone of contention
While it's legal for members of Congress and their spouses to own stocks, it has been a controversial topic for years.
Former Republican US Senator David Perdue has been criticised over and over again for his stock trading during his six years of tenure.
As long as the members disclose their transactions as per the STOCK (Stop Trading on Congressional Knowledge) Act, 2012, there isn't a problem legally. But now Pelosi's transactions could push for stricter regulations regarding stock transactions of members of Congress.
In fact, US Senator Jeff Merkley of Oregon is one member of Congress who has co-sponsored legislation to ban the adding of individual stocks by members of Congress.