#475
Lawmakers Moonlight The Stocktraders
Published:
Feb 13, 2023
Author:
Sarah Parsons Wolter
Share:
On the heels of stocks being off to a strong start this month, encouraging inflation data to start the year, and a smaller rate hike that marks a more dovish turn from the Fed, the prospect of a so-called soft-landing seems closer to reach.
But while everyday investors grapple with “what’s next?” amid the market’s volatility, determining whether to hold out for the long term or sell, members of Congress have come under criticism for engaging in those very same trading activities. “Year after year, politicians have somehow managed to outperform the market, buying and selling millions of stocks in companies they’re supposed to be regulating”, Republican Sen. Josh Hawley said, introducing a bill to ban Congressional members and their families from trading. One finding suggests that the Pelosis have amassed fortunes, making as much as $30.4m from tech stocks between 2007 and 2020. Among those stocks include Alphabet, which has regularly been under congressional scrutiny.
Public polls as well as bipartisan bills have uniformly endorsed the idea of banning congressional stock trading. The premise being that Congressional members have access to classified briefings and enact federal policy and legislation that can drive markets and impact the fate of a companies’ bottom line. Many congressional members may even have direct oversight committees on the companies they are trading, which presents inherent conflicts of interest.
The jury is still out on whether congressional members have truly managed to generate alpha by stock-picking or whether they would just be better served with an index fund. Amid the criticism, an anonymous platform called “Unusual Whales” was created to bring greater transparency to the public by cataloging the trades of politicians as they are made publicly available. The recent creation of a “Nancy Pelosi” ETF indicates that she was able to outperform the S&P by 13% in 2021, citing the “gross inequities in information, education and access” between the House representative and the everyday trader.
The fate of a congressional stock-trade ban seems to be crystallizing, with reforms being drafted to root out what’s being perceived as “insider trading”. Do we let the free hand of the market economy dictate or are the lines between private finances and public responsibilities too obvious to ignore?
Portfolio News
Mondu announces the launch of MonduSell - Following this launch, traders will have the possibility to benefit from flexible payments on every sales channel, including field sales, email orders, and tele-sales. MonduSell offers its customers multiple B2B payment methods with flexible terms while processing orders in real-time quickly and efficiently, and brings the solutions of B2C-like payment experiences in B2B sales, allowing traders to provide their customers with multiple payment terms, meeting their expectations and preferences. Read more
Flutterwave announces expansion into North Africa with new Egypt payments licenses - Flutterwave as a result of these licenses becomes one of the few payment service providers in Egypt with both local and global settlements capabilities. The licenses will also enable Flutterwave to act as an official payment service provider in the country, collect payments on behalf of its customers and settle payments locally and globally. Read more
Kenya withdraws financial impropriety case against Flutterwave - The withdrawal of the charges, which came about 7 months ago, was noted in a Kenyan High Court this week. Dropping the case will come as a boost to Flutterwave, a Lagos and San Francisco-based financial technology company, that plans to expand its services of facilitating cross-border transactions in multiple currencies for companies, including Alibaba’s Alipay and Uber. Read more
Coincover raises $30m to help protect digital assets from hacks and human error - The Cardiff company works with digital asset custody and settlement businesses like Sequoia-backed Fireblocks and BitGo through partnerships but also works with crypto exchanges, banks, and hedge funds. Coincover's funding round was led by San Francisco-based Foundation Capital, with participation from FinTech Collective, and the new capital will go towards increasing the company's headcount, particularly in commercial and engineering teams, alongside further investment in its tech platform. Read more
Lawmakers Moonlight The Stocktraders
ETFs following US lawmakers’ stock trades go live - Investors who believe that members of the US Congress have access to information that could give them a trading advantage can now trade two exchange traded funds that follow members’ stock transactions. The two new ETFs, NANC and CRUZ, whose tickers are a play on the names of US politicians on opposite sides of the political spectrum, will also invest according to political affiliation. Read more
Unusual Whales ETFs - Unusual Whales is an options and equity data platform that has been at the forefront of the intersection of politics and finance for over three years. They have started a reinvigorated effort on how lobbying, committee conflicts, and finance changes Congress and are currently working on bringing new financial products so that retail can invest alongside Congress and reduce information asymmetries. Read more
Lawmakers shouldn’t be stock traders - By the very nature of their jobs, members of Congress have no business trading stocks. They may have access to classified or otherwise privileged information. They may know of pending legislation that could affect an industry’s bottom line. They may have oversight duties for the very companies they own shares of. Even if their portfolios simply fluctuate along with the market, there’s no escaping the appearance of a conflict when lawmakers moonlight as traders. Read more
Industry News
Home equity loans are booming — here’s why - Originations soared in the third quarter of last year, per TransUnion data released last week. The reason for this is that a homeowner might ideally want to buy another house with different features, but either can't afford a higher mortgage rate or doesn't want to give up their 3% bargain - so instead of doing a cash-out refinance, homeowners are turning to HELOCs. Read more
Robinhood board approves plan to buy back Sam Bankman-Fried’s $578m stake - The ex-CEO originally purchased his stake in May 2022 through Emergent Fidelity Technologies, which was controlled by both Bankman-Fried and fellow FTX co-founder Gary Wang. Both Wang and Bankman-Fried took out loans directly from Alameda Research to fund the acquisition, according to court filings. Read more
Visa opens Atlanta HQ to tap diverse local talent and fintech denizens - “We are here because we’ve got more than 70 FinTech and payment companies here,” Visa Head of Global Client Services Elizabeth Rector said. And because of the city’s concentration of colleges and universities, she added, that in coming to Atlanta, Visa now has access to one of the best talent pools in America. Read more
TripActions rebrands as Navan, adds ChatGPT to expense reports - With ChatGPT capabilities built in, the platform’s chatbot will be able to learn a users’ preferred airlines, hotels and restaurants, and incorporate these options into a proposed itinerary, while leveraging natural-language models to respond to voice commands. The company will also consolidate its travel, corporate card and expense services into a single app. Read more
Digital bank Revolut to offer crypto staking - Revolut, which has around 25m customers worldwide, is rolling out the service this week to customers in the U.K. and European Economic Area (EEA). At first, the London-based fintech company will support staking of the tokens of Polkadot (DOT), Tezos (XTZ), Cardano (ADA) and Ethereum (ETH). Yields on the assets reach up to 11.65%, though these are variable. Read more
India to block over 230 betting and loan apps, many with China ties - The Ministry of Electronics and Information Technology is in the process to enforce an emergency order to ban 138 betting and gambling apps and another 94 that provided unauthorized loan services in the interest of protecting the country’s integrity. The move is the latest in a series of government efforts to crack down on shark loan apps and other services that are posing a threat to the nation’s citizens. Read more
American Express and Microsoft develop AI-powered business travel expense reporting - With the solution developed by American Express and Microsoft, business travelers will be prompted to upload a photo of the receipt each time they use their American Express Corporate Card, and an AI-powered decision engine will use that photo to categorize the transaction, assign a risk score ranging from “recommended for auto-approval” to “not recommended for approval” and send that information to an expense management system. Read more
Select Financings
BlockJoy - Boston based provider of white-label blockchain nodes as a service raised $12m in Series A funding from Gradient Ventures, Draper Dragon, Borderless HNT and Renegade Ventures. Read more
Canoe Intelligence - New York based alternative investment data provider raised $25m in Series B funding led by F-Prime Capital. Read more
Carbonplace - London based carbon markets startup raised $45m in Seed funding led by BBVA, BNP Paribas, CIBC, Itaú Unibanco, National Australia Bank, NatWest, Standard Chartered, SMBC and UBS. Read more
Car IQ - San Francisco based vehicle payments startup raised $15m in Series B extension funding led by Forte Ventures. Read more
Cenoa - Singapore based blockchain wallet raised $7m in Seed funding led by Quiet Capital. Read more
CUB3 - Los Angeles based web3 loyalty platform raised $6.5m in Series A funding led by Bitkraft Ventures and Fabric Ventures. Read more
Elementus - New York based blockchain data intelligence platform raised $10m in Series A funding led by ParaFi Capital. Read more
Growblocks - Denmark based revenue-planning software company raised €6M in Seed funding led by Project A Ventures. Read more
Habitto - Tokyo based savings startup raised $3.9m in pre-Series A funding led by Saison Capital and Cherubic Ventures. Read more
Inkle - Delaware based bookkeeping and compliance startup for cross-border companies raised $1.5m in pre-Seed funding from Picus Capital, Saison Capital and Force Ventures participated. Read more
Kasheesh - New York based digital payment platform raised $3.5m in Seed extension funding from investors including Lil Baby, Fanatics CEO Michael Rubin, actor Robin Wright, and Odell Beckham Jr. Read more
Lunar - Denmark based neobank raised €35m in growth funding from investors including Heartland, Kinnevik, Tencent, IDC Ventures and Will Ferrell. Read more
Mazepay - Denmark based B2B payments company raised €4m in growth funding led by Scale Capital. Read more
Moonfare - Berlin based private equity investment platform raised $15m in Series C extension funding led by 7 Global Capital. Read more
Snab - Spain based business-to-business payments and cash management startup raised €1.1m in pre-Seed funding led by YCombinator. Read more
SunFi - Nigeria based solar energy financing and management startup raised $2.3m in Seed funding co-led by Factor[e] and SCM Capital Asset Management. Read more
Tazapay - Singapore based cross-border payments startup raised $16.9m in Series A funding led by Sequoia Capital Southeast Asia. Read more
Triple Whale - Ohio based data platform for e-commerce brands raised $25m in Series B funding led by NFX, Elephant and Shopify. Read more
Turno - India based EV distribution and financing platform raised $13.8m in Series A funding led by B Capital and Quona Capital. Read more
Uniify - Copenhagen based provider of no-code onboarding software for financial companies raised €3m in growth funding led by People Ventures and Forward VC. Read more
FinTech Collective Newsletter
Curated News with Context
Delivered every Monday, the weekly newsletter, produced by our team, provides a tightly edited rundown of global fintech news, along with a bit of our original analysis.