A new AI-powered tool could revolutionize how lawmakers are held accountable for insider trading

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A new AI-powered tool could revolutionize how lawmakers are held accountable for insider trading
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  • A graduate school project could transform how lawmakers are held accountable for stock trades.
  • PoliWatch, developed for a UC Berkeley capstone project, helps point researchers to misconduct.
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A group of California-based graduate students has developed an AI-powered tool to catch congressional insider trading as soon as possible. Though in its infancy, the program could be a revolutionary way for journalists, researchers, and the general public to hold public officials accountable.

For their Fall 2023 master's capstone project at UC Berkeley, Mats Dodd, Aditya Shah, Jocelyn Thai, and Connor Yen came up with the idea for PoliWatch to see if insider trading is as prevalent of an issue in Congress as many perceive it to be.

"We dug into it and were really disappointed when we found that in the last decade, there's maybe been twelve successful investigations that have led to anything," Dodd told Business Insider, adding he believes that congressional ethics committees tend to sweep infractions "under the rug."

Shah explained that PoliWatch works by feeding its system publicly available congressional stock filings, hearing schedules, committee assignments, and sponsored travel.

"We're basically contextualizing stock transactions with key information such as committee assignments, sponsored legislation, and our team of investigative experts to identify suspicious activities with ease," Shah said, noting that the tool was already able to identify when lawmakers made questionable COVID-related trades during the pandemic, which the Department of Justice investigated in 2020.

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A new AI-powered tool could revolutionize how lawmakers are held accountable for insider trading
The front-facing dashboard of PoliWatch.PoliWatch

"We really see this tool as almost being like putting a magnifying glass on what's happening and letting the people see what's actually going on because it's crazy," Dodd said.

Robert Maguire, the research director at Citizens for Responsibility and Ethics in Washington, is thrilled about the new tool's potential use cases.

"If I'm understanding correctly with this can do, it is going to potentially revolutionize the public and journalist's ability to track the stock trades and ownership of members of Congress," Maguire said.

PoliWatch is in a "private beta" period as the project lacks outside financial support. At the moment, keeping it up and online costs the team around $500 a month. Shah said the team still plans to update and improve the product, but it's not anyone's full-time job — they haven't even incorporated a business yet for PoliWatch.

Another reason the project isn't publicly available yet is how young it is. Dodd said that for now, the team wants "a human in the loop in any outputs of our model because we want people with expertise in this area to vet information" and not have the data misconstrued.

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Shah added that looking ahead, they'd like to expand PoliWatch's reach beyond congressional transactions to promote corporate accountability as well.

Congress' thorny trading history

As Business Insider's far-reaching "Conflicted Congress" investigation found in 2021, lawmakers regularly violate the federal Stop Trading on Congressional Knowledge (STOCK) Act with little consequence. Many members of Congress own shares of companies that overlap with their committee assignments.

Public sentiment toward members of Congress and their families trading stocks came to a head at the end of 2021 when then-Speaker of the House Nancy Pelosi came out against banning the practice in a press conference.

A new AI-powered tool could revolutionize how lawmakers are held accountable for insider trading
Former Speaker of the House Rep. Nancy Pelosi speaks to members of the press after a members-only classified briefing.Alex Wong/Getty Images

A 2022 poll from Data for Progress found that 70% of likely voters supported a ban on congressional stock trading, with just under half saying it would make them more likely to vote for a candidate if they supported a ban.

Though bipartisan anti-congressional trading bills have been introduced in recent years, none have been brought to a vote on the House or Senate floor.

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Dodd said he sees PoliWatch as a way to try and restore confidence in congressional transparency.

"In terms of building public trust and faith in the people running our country, it's at all-time lows," he said. "This could be a big boost to bring that up."

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