December 4, 2022
ETFs to Allow Investors to Track Trades Made by DC Lawmakers

ETFs to Allow Investors to Track Trades Made by DC Lawmakers

  • Two proposed exchange-traded funds would mimic stock trades made by members of Congress and their spouses. 
  • If approved, the ETFs would track trades by Democrats and Republicans, under tickers NANC and CRUZ. 
  • One poll shows 70% of likely voters in America do not want lawmakers to trade stocks while in office. 

Polls show that most likely voters in America do not approve of Congress members buying or selling stocks, but two proposed exchange-traded funds will allow investors to mimic the trades of Washington lawmakers. 

The prospective funds – Unusual Whales Subversive Democratic Trading ETF and Unusual Whales Subversive Republican Trading ETF – would invest primarily in stocks based on public disclosures of trades made by Democratic and Republican members of Congress and their spouses, according to a mid-September filing with the Securities and Exchange Commission

The planned tickers NANC and CRUZ draw inspiration from House Speaker Nancy Pelosi and Republican Senator Ted Cruz of Texas. The funds are designed to invest in a portfolio of 500-600 equity securities, and will sell a security when a position is reported as being sold, according to the regulatory filing. 

Ted Cruz

Senator Ted Cruz.

REUTERS/Loren Elliott

Trading by lawmakers has drawn public scrutiny as dozens of congressional members have failed to report their financial trades properly. Insider and other news organizations have identified 72 Congressional lawmakers who were not in compliance with the Stop Trading on Congressional Knowledge Act of 2012, also known as the STOCK Act.  

The House of Representatives may vote next week on legislation to ban Congress members from trading stocks in reforming the STOCK Act. 

Unusual Whales, which offers free online and premium tools tracking equities, options, crypto markets for retail investors, is working on launching the NANC and CRUZ ETFs in partnership with Subversive Capital, a fund manager that invests in companies that aim to disrupt the status quo in their industries. Subversive runs the Subversive Metaverse ETF whose ticker is PUNK

“Unusual Whales hopes to push for changes in politics. We have been at the forefront of [a] political stock trading ban, and because of our efforts together with others, are the closest in history the US has ever come to a trading ban. One hopes this will increase public notice on the issue,” it said on its website, noting that it’s not collecting fees on the ETFs.

Among high-profile trading in Washington, House Speaker Nancy Pelosi’s husband, Paul, regularly purchases and sells stocks and stock options. In July, the California representative denied her venture capitalist husband uses information she provides to make stock trades.

70% of likely voters want new legislation to ban stock trades by Congress members, according to a poll shared with Insider in June by Data for Progress

The ETFs if approved by the SEC could be launched after the November mid-term elections. The funds would each charge an expense ratio of 1% and would be managed by Subversive’s Michael Auerbach and Christian Cooper.The ETFs won’t consider investments made by Independent members of Congress.