The Musk-damaged agency is unlikely to investigate whether Trump and his allies are profiting from advance knowledge about tariff changes or meme coin shenanigans.
This article was originally published by The American Prospect.
A combination of factors is limiting the public’s ability to ascertain the depths of insider trading and market manipulation likely occurring as a result of President Donald Trump’s chaotic trade war and self-enriching crypto schemes.
Although presidents have long been able to move markets, Trump’s unification of power unto himself turbocharges that power. Vacillating tariff policy and crypto interventions are examples of how Trump can and does exercise market-shaping power to an unprecedented degree. He and Elon Musk have also ensured there are fewer cops on the beat, handcuffing regulators at the Securities and Exchange Commission (SEC) who might have investigated the seemingly unscrupulous actions of the president and his billionaire friends.
“The Trump administration has gutted SEC staffing by almost 20 percent,” Corey Frayer, director of investor protection at the Consumer Federation of America and former SEC official, told the Prospect. “Now the SEC has the job of overseeing a $125 trillion market with 4,000 staff and a budget of $2 billion.”
“That’s catastrophic even before you consider the new SEC has no interest in holding large financial interests accountable,” added Frayer.
This is what Musk’s so-called Department of Government Efficiency (DOGE), along with Trump’s accountability-averse appointees, have wrought: an enfeebled SEC workforce working amidst a growing culture of staggering corruption and fear.
Trump’s Tariff Adjustments: Profitable Opportunities for Insiders?
In the wake of Trump’s April 2 implementation of across-the-board tariffs, capital markets quickly tanked. On the morning of April 9, Trump wrote on his Truth Social platform, “THIS IS A GREAT TIME TO BUY!!!” A few hours later, the president announced a 90-day pause on most tariffs, notably excluding China. Stocks began to rally. A surge in well-timed options trades preceding the pause raised questions about potential insider trading.
The essential question here: Did Trump tip off his inner circle and Wall Street friends about his plan to reverse course? Trump’s decision to boast in the Oval Office that Charles Schwab “made two and a half billion today” certainly didn’t assuage fears that something illegal may be afoot. It’s possible that Schwab, being a savvy investor, anticipated a change in Trump’s tariff policy, or perhaps he acted quickly in the wake of Trump’s social media post.
It’s doubtful we’ll ever know, however. For one thing, Trump’s SEC in February eliminated a requirement for investors to report certain personally identifiable information to the Consolidated Audit Trail (CAT) system. SEC Commissioner Caroline Crenshaw, the lone remaining Democrat on the five-member board, warned that the move would impede “regulators’ ability to understand suspicious activity.”
A pair of Senate Democrats urged the Office of Government Ethics (OGE) to investigate whether Trump or any of his allies had engaged in insider trading using early, private insight into his tariff turnabout. But such an inquiry is implausible given that OGE is led by Doug Collins, a Trump toady. A half dozen Senate Democrats asked freshly confirmed SEC chair Paul Atkins to conduct an investigation, but that’s improbable for the same reason. The Trump administration’s likely refusal to investigate these scenarios would be a slap in the face of a public that has long sought more transparency from its elected officials.
Trump’s incoherent tariff policy has paved the way for seemingly endless tariff adjustments and the brokering of bilateral trade deals, with each round of potential change presenting additional opportunities for fraudulent profiteering. It has also engendered an opaque exemption process where Trump donors and firms connected to the Republican Party seemingly secure relief behind closed doors.
Speaking two weeks ago at a private, invitation-only gathering hosted by JPMorgan Chase, Treasury Secretary Scott Bessent reportedly told Wall Street investors that the tariff impasse between the U.S. and China would soon ease. After his comments were leaked to the press, stocks soared. Later, Trump essentially confirmed Bessent’s message during a public press conference. The upshot is that the financial elites with whom Bessent spoke had prior access to secret knowledge, which they could have used to make a quick buck (or many millions of them).
Soon after, a report surfaced that White House officials were alerting Wall Street executives that they were nearing an agreement in principle on a proposed trade deal with India. The report of clandestine communications between the Trump administration and financial elites raised more red flags about potential insider trading. Sen. Elizabeth Warren (D-MA) asked Bessent to explain why Trump officials “appear to be providing Wall Street insiders secret information on the tariffs, while withholding that information from the public.” She requested answers to her questions by May 8. There is no evidence as of yet that Bessent complied with Warren’s request.
$TRUMP: A Boon to Trump’s Family and Friends
When it comes to crypto, Trump is unabashed about his penchant for market manipulation. Likely inspired by henchman Musk’s decision to name their cost-cutting division after Dogecoin, in which Musk is famously also significantly invested, Trump launched the $TRUMP meme coin on January 17. Practically, the only purpose of meme coins is self-enrichment and insider dealing—tokens are typically hoarded by whoever created the coin, and if the price can be made to pop through marketing on social media, those insiders can sell into the spike, while the retail suckers end up holding the bag as it collapses immediately afterward. That’s what the “Hawk Tuah Girl” did and that’s what the Trump family is doing.
Most of the time, new meme coins are forgotten garbage within a few days or weeks, but Trump has innovated a new use for his: selling access to the White House. Since launching $TRUMP, the president has utilized multiple gimmicks to boost the token’s value and turbocharge trading volume, enriching himself and insiders in the process. Most notable is the open dinner invitation to the top 220 $TRUMP holders, which would also include a pre-dinner reception and White House tour for the top 25 holders.
It’s an innovative extension of our already shady campaign donation practices whereby wealthy individuals dole out huge sums to get an audience with elected officials. Trump takes it to a new level here by eliminating the campaign treasury obstacle, directing the funds directly to his pockets while presumably expanding the universe of individuals able to curry favor to include wealthy foreigners. According to crypto researcher Molly White, about three-quarters of these wallets likely belong to foreign investors. Unsurprisingly, the token’s value soared more than 50 percent when the groveling contest was announced on April 23. Participants have until May 12 to secure their spots in the corruption playoffs.
The odds have been stacked against everyday people since the day $TRUMP launched. Analyzing the project in March, the Financial Times found that the initial distribution of the token was managed by four accounts, which have made at least $314 million in token sales and $36 million in trading fees. Two weeks after the token’s launch, Reuters reported that the entities behind the launch had captured close to $100 million in trading fees. In a recent report, Chainalysis estimates that while the project’s creators have amassed $324 million in trading fees and 58 holders have made over $10 million each, 764,000 accounts have lost money on the token.
Making matters worse, there will undoubtedly be no public recourse for any scheming behavior, since Trump’s SEC has decided to no longer apply federal securities laws to meme coins.
“The new SEC chair was an FTX lobbyist,” Frayer said, referring to Atkins’s previous stint as CEO of Patomak Global Partners, the consultancy he founded in 2009. “He knows the kind of impact a sweeping statement of amnesty has and there is no doubt the new crypto task force intends to salt the earth of crypto regulation.”
Defanging the Federal Securities Regulator
Taken together with Trump and Musk’s attacks on the agency, the Republican-led SEC’s disinterest in real investor protection means white-collar crime is far more likely to go unchecked. Already, the Trump administration has halted or dropped dozens of investigations and cases, including several at the SEC. The enforcement of laws against corporate wrongdoing has been on the decline for years; following the refusal of Biden’s attorney general, Merrick Garland, to adequately prosecute white-collar criminals, Trump is lowering the bar even further.
Civil servants who still have jobs after the mass firings and buyouts imposed by Musk’s DOGE understand that their job security is nonexistent. In such a precarious environment, we shouldn’t expect regulators to launch probes, or even to leak damning information to journalists.
Enforcement and whistleblowing have been effectively extinguished, with unemployment potentially awaiting anyone who dares challenge the king. Can we entirely foreclose the prospect of incarceration or deportation as potential penalties for the “radical left thugs” who try to crack down on corporate misconduct? In this environment, even sleuths outside the SEC are likely to refrain from sharing information with the agency’s tip line. Why risk angering the president or one of his friends?
Here it’s important to distinguish between the ability of the SEC to go after market manipulation generally, which it may continue to do, versus the likelihood of it investigating Trump associates. Does anyone expect Atkins to approve a case against Bessent? Of course, Trump’s SEC could say it “looked into” something, and everything was hunky-dory. That’s why we need independent prosecutors with civil service protections.
At present, we can’t trust the SEC because the White House has taken steps to ensure that it is slavishly pro-Trump. The February executive order that Trump issued to bring independent agencies under his purview went into effect on April 18. His administration has also asked the Supreme Court to overturn the precedent, established in 1935 in Humphrey’s Executor v. United States, insulating independent agencies from presidential interference.
Regardless of whether those power grabs succeed, Trump and Musk have already critically weakened most federal agencies through DOGE cuts. Hundreds of former SEC regulators, including regional directors, have been pushed out in the few months since Musk busted out his chain saw. As the Prospect’s David Dayen puts it, “no personnel is policy,” meaning that dismissing or forcing out regulators en masse effectively sanctions corporate malfeasance. Trump is accomplishing through staff reductions what he may not be able to achieve with Congress.
What’s more, the SEC’s remaining civil servants are now led by Atkins, a key Trump and crypto industry ally who has long pushed for financial deregulation, decried stiff monetary penalties for Wall Street fraudsters, and even criticized Dodd-Frank’s creation of the SEC whistleblower program. He’s joined on the board by two like-minded Republican commissioners: Hester Peirce and Mark Uyeda.
Put simply, Trump and Musk’s evisceration of the SEC has turned the agency into a shell of its former self, at a time ripe for rampant market manipulation. This, we fear, might be the point.
The above photo is a work of the U.S. federal government and in the public domain.