Insider trading is no longer limited to Trump allies. A franchise of your own is now available – for a price
There are vanishingly few white-collar crimes the Trump administration hasn’t wholeheartedly embraced. Selling pardons? Check. Running a crypto scam on the president’s most devoted followers? You betcha. Possibly leaking the personal data of millions of Americans? Why not! Letting the company whose contaminated baby formula killed infants off the hook? It sounds almost too cliché and evil, but yup, they did that too.
But there’s one crime that seems to have been embraced by the entire administration, from the president’s son-in-law and Iran negotiator, Jared Kushner, to the president’s teleprompter operator and even lower-level executive branch staffers: insider trading. Now, the president seems to have landed on a new scheme to further corrupt and monetize the highest office in the land.
A Head Start on Market Manipulation
Starting August 1, the Trump Media & Technology Group will begin selling Wall Street trading firms faster access to posts from popular Truth Social accounts, likely including the president’s own, providing a privileged pathway to those eager to seize on social media posts that readily shift financial markets. Subscribers will now see market-moving posts before everyone else, allowing them to pounce before the public even has a chance to absorb the implications. When my colleagues Timi Iwayemi and Kenny Stancil warned last year that we most definitely couldn’t count on the defanged Securities and Exchange Commission to keep a watchful eye on the President’s market manipulation, we weren’t expecting his business company to unabashedly develop a product line based on it.
There are three reasons why insider trading and associated forms of market manipulation have become the hallmark corruption of the Trump administration. The first is the ease: insider trading simply requires logging on to a pre-existing brokerage account and making trades. This has only become easier with the rise of prediction markets. Whereas prospective insider traders used to have to analyze information to make trades—for instance foreseeing that a global pandemic may result in increased profits for companies that manufacture medical PPE—prediction markets have eliminated the need for even this rudimentary thinking. Now, someone with advanced knowledge of a military raid on the president of Venezuela can just bet on him being removed from power rather than guessing what impact this may have on the oil market. And a White House staffer with advanced knowledge of the president’s speeches can literally just gamble on what words he will say rather than guess how the market will react to the content of his oration.
The second reason is the absence of legal consequences, which has certainly emboldened corrupt individuals. Insider trading is a notoriously difficult crime to prosecute, and has flourished even when the Department of Justice and SEC are ostensibly attempting to combat it. It’s far easier when these agencies, which have been decimated by DOGE, are being led by political appointees actively hostile to the prosecution of the president’s political allies.
The final reason is that DC insiders have seemingly settled on insider trading as an acceptable form of corruption because its harms are diffuse and hard to explain to a layman. Whereas other forms of financial manipulation—say running a “shitcoin” cryptocurrency pump and dump scheme—have obvious winners and losers, identifying the individuals at whose expense unfair profits have been made is sometimes a challenge. On its face, a trade in which inside information is used might even seem to be a mutually beneficial transaction based on a mutually agreed upon price. While the individual harm to any one person may be relatively small, the damages are real. Those people not trading on non-public information bear the cost of the counterparty’s profit, leaving more passive investments, say by pension funds or middle class retirement accounts, as the party financing the insiders’ profits.
In the case of prediction markets, the cost of insider trading gets borne by the ordinary people who fall prey to the industry’s advertising, leaving the average trader worse off than if they had gambled on a traditional sportsbook. Investors not benefitting from the advantage of inside information not only end up shouldering these losses, but, in an attempt to compete with their insider-trading rivals, become more likely to embrace this illegal tactic in order to protect their own returns. In short, the use of inside information creates a race to the bottom, steadily eroding trust in both the market and the government as insiders profit to the detriment of everyone else.
To some extent, insider trading is not a new issue in politics. Members of Congress have long used their positions to profit handsomely from the stock market, trading on stocks using information unavailable to the public. Perhaps the most glaring example of this was 6 years ago when a number of Representatives and Senators managed to make extraordinarily well-timed stock trades ahead of Covid-19 pandemic. But while in the past trading stocks based on insider information was the sole domain of a handful of Congressional insiders, the Trump administration has allowed even relatively junior government employees to grow their modest government salary through exclusive investment opportunities.
Turning it Into Something More
Back to the president’s latest corrupt innovation. It’s well established that Trump prefers to make policy by Truth Social post—he’s used the platform to announce tariffs, policy towards Iran, and other developments which have significantly influenced various market positions. The plan to sell access to Wall Street firms will obviously give them a slight market advantage, but is this technically insider trading? Probably not, since by offering to sell it, Truth Social would function similarly to other news outlets. It is not dissimilar to it though. Trump has merely found a way to profit from the information that only he knows, as President of the United States, without needing to trade on it himself. Is this illegal? Possibly. Is it unethical? Undoubtedly. But who is going to find the president to be in violation of the law? The Supreme Court which granted him broad immunity for his actions? Probably not.
Currently, there’s little Democrats can do about the current epidemic of insider trading by themselves, but come next January they will have the ability to conduct broad oversight if they win one of the two chambers of Congress. First and foremost on that oversight agenda should be aggressive investigation into the president’s corrupt acts, including this latest venture. Elected officials at the state level should also fight back against the president’s graft. State pension funds are some of the largest institutional investors in the country and could be harmed significantly by both the raft of insider trading and from the president’s latest grift. Statewide officials should publicize this to pension beneficiaries, while attempting to fight back against this in the courts. While the diffuse harms of insider trading are not immediately obvious, ordinary people can see this grift for what it is: an attempt by the president to give the wealthy and powerful a leg up in the stock market—further manifestation of our ongoing scourge of elite impunity.
Both Senators Jon Ossoff (D-GA) and Raphael Warnock (D-GA) can partly credit their 2021 election victory to their opponents’ insider trading allegations. Democrats would be wise to stake out the higher ground on this issue and continue pushing to ban all Members of Congress and executive branch employees from wagering on prediction markets or owning individual stocks. But those who desire to restore trust in collective economic activity upon Trump’s exit from the White House can’t rest there. They will need to build a Justice Department capable of pursuing more white collar cases than ever before come 2029.
A pledge to aggressively pursue such crimes when taking the White House can’t hurt either. Maybe those currently flaunting the law will hesitate to do so if they know their ally won’t control the DOJ forever?
Quick Corruption Hits:
The US seized $13 billion of Venezuelan oil revenues. Nobody appears to know where it all has gone.
DOGE alumni, backed by major investments from Trump allies, have launched a defense contracting firm.
The Trump administration permitted the export of advanced semiconductors to the UAE despite warnings from career staff at the Department of Commerce not to.
The Trump administration has fiercely defended the oil industry from any regulations at home or abroad, even imposing new tariffs on the European Union in response to the EU’s regulations requiring that companies “develop ‘climate transition plans.’”
Want more? Check out some of the pieces that we published or contributed research or thoughts to in the last week:
Issue 107 — An unserious offer
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Mamdani Tapped McKinsey Partner After Axing $9.9 Million McKinsey Contract