Senators demand investigation into Trump adviser for possible insider trading

“Icahn made a big bet that the price of renewable fuel credits would drop. Then he advised on policies that made them drop.”

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Due to the fact that Trump adviser Carl Icahn failed to divest his financial interests while his petroleum refining company suspiciously made $50 million in profits, several Democratic Senators have called upon the Securities and Exchange Commission (SEC), U.S. Environmental Protection Agency (EPA), and Commodities Futures Trading Commission (CFTC) to investigate potential insider trading and market manipulation. As Icahn advised Trump and became Special Advisor to the President on Regulatory Reform, his company sold millions of renewable fuel credits while Icahn allegedly took steps to lower the price for future purchases.

“We are writing to request that your agencies investigate whether Carl Icahn violated insider trading laws, anti-market manipulation laws, or any other relevant laws based on his recent actions in the market for renewable fuel credits,” Sens. Elizabeth Warren, Debbie Stabenow, Tom Carper, Sherrod Brown, Sheldon Whitehouse, Tammy Baldwin, Tammy Duckworth, and Amy Klobuchar wrote in a letter to the heads of the SEC, EPA, and CFTC.

“Mr. Icahn ‘made a massive bet in 2016’ that the price of renewable fuel credits would drop,” the letter continued. “He then – as an unpaid adviser to President Trump – recommended personnel and policies that did, in fact, cause the price of these credits to drop. The net result was an ‘impossible’ ‘rare profit’ on the credits, ‘a $50 million turnaround’ from Mr. Icahn’s initial investment.”

As the majority owner of CVR Energy, Icahn failed to divest his financial interests when Trump hired him as Special Advisor to the President on Regulatory Reform. Although Icahn’s potential violation of conflict-of-interest laws falls under the jurisdiction of the Justice Department, Office of Government Ethics, and Office of White House Counsel, his possible crimes of insider trading and market manipulation of renewable fuel credits fall under the jurisdiction of the SEC, EPA, and CFTC.

“Renewable fuel credit insider trading and market manipulation hurts all parties, including biofuel producers and refineries, and publicly available evidence raises serious questions about Mr. Icahn’s conduct,” the senators wrote. “Over the course of 2016, including the months immediately prior to and following President Trump’s election, CVR delayed purchases of necessary renewable fuel credits and instead sold millions of them. This ‘counterintuitive trading strategy… [was] a bet that it could buy the credits it would need later at lower prices.

“Mr. Icahn secured a position as a senior adviser to President Trump, from which he was, according to press reports, able to influence decisions that drove down the price of the credits. Detailed reporting by Reuters noted ‘several political events’ that drove down the price of the credits and benefited CVR and Mr. Icahn. Mr. Icahn reportedly advised President Trump to choose Mr. Pruitt, a critic of the renewable fuel credit program, as EPA Administrator. When President Trump did so, the price of the credits dropped by approximately 20%. Then, after February 27, 2017, when press reports indicated that Mr. Icahn had presented the White House with executive language to modify the renewable fuel credit program, RIN (Renewable Identification Numbers) market prices dropped again, by approximately a third, reaching a 17-month low that represented about a 70% decline from the November 2016 peak cost of the credits.”

Using his political position to influence Trump’s decisions, Icahn allegedly managed to lower market prices for his company with the nomination of Pruitt to the EPA while manipulating policies that directly affect his corporation. Besides launching an investigation into Icahn’s potential crimes, the senators also asked SEC Chairman Jay Clayton and EPA Administrator Scott Pruitt whether they would voluntarily recuse themselves from the investigation.

“An additional complication of this matter will be potential recusals of Administrator Pruitt and Chairman Clayton from issues involving Mr. Icahn,” the senators continued. “Mr. Icahn was reported to be heavily involved in interviewing candidates for SEC Chairman, and Chairman Clayton has acknowledged that he met with Mr. Icahn after he was nominated as SEC Chair. Similarly, Mr. Icahn was involved in President Trump’s choice of Administrator Pruitt for EPA Administrator, and reportedly discussed renewable fuel permits issues with him on several occasions prior to his nomination. These contacts, and Mr. Icahn’s role in selecting both Chairman Clayton and Administrator Pruitt, may mean that recusals are necessary in order to prevent conflicts of interest, or the appearance of conflicts of interest, as your agencies investigate the matter.”

After requesting an investigation into Icahn’s communications with the president and an analysis of his decision-making process regarding his company and the price of renewable fuel credits, Sen. Warren wrote on Twitter, “Icahn made a big bet that the price of renewable fuel credits would drop. Then he advised on policies that made them drop. Icahn made $50M.”

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