In response to a recent New York Times article accusing Trump administration officials of privately meeting with conservative allies and Republican donors to warn them of the economic impact of COVID-19 while President Donald Trump was publicly optimistic, Senator Elizabeth Warren formally requested last week that the Securities and Exchange Commission (SEC) and Commodities Futures Trading Commission (CFTC) conduct an insider trading investigation into the Trump administration.
According to a recent New York Times article, several Trump administration officials met with Republican donors and other members of the conservative Hoover Institution’s board of directors in February 2020 to secretly contradict President Trump’s false public boasts that the coronavirus was “very much under control” and that the “stock market [is] starting to look very good to me.” Trump officials reportedly told investors in private to start “betting on the idea that the stock prices of companies would soon fall.”
On Thursday, Sen. Warren wrote a letter to the heads of the SEC and CFTC saying, “If this report is accurate, it represents an appalling abdication of duty by President Trump and top officials in his administration, revealing that while publicly claiming to be optimistic about the coronavirus and its impact on the economy, they were privately informing donors and conservative allies that conditions were much more dire using information that was likely nonpublic. It also indicates that numerous investors may have used this early and inside information about the looming, tragic economic and public health consequences of the pandemic to extract enormous profits for themselves.
“This incident—in which “[t]he president’s aides appeared to be giving wealthy party donors an early warning of a potentially impactful contagion at a time when Mr. Trump was publicly insisting that the threat was nonexistent”—appears to be a textbook case of insider trading, and I am writing to request that you open an investigation of this matter, including a review of the material nonpublic information provided to investors and any trading that occurred as a result of this exchange of material nonpublic information, as expeditiously as possible.”
Federal law bars individuals from “purchasing or selling a security while in possession of material nonpublic information.” Violation of these laws may subject individuals to civil penalties “three times the amount of the profit gained or loss avoided” and criminal penalties up to $5,000,000 and 20 years imprisonment. Similarly, insider trading of swaps, futures, or commodities markets may violate CFTC’s insider trading rules promulgated under the Dodd Frank Act.
Sen. Warren concluded the letter by requesting that the SEC and CFTC begin investigating the Trump administration for insider trading as soon as possible, including tracking down the administration officials who privately warned investors, the identities of everyone who received the sensitive information, and a list of any trades of securities, futures, or commodities made by those individuals during the beginning of the pandemic after receiving this information.
On Thursday, Warren took to Twitter and wrote, “Trump assured Americans that COVID was under control in February, but his advisors privately told donors & insiders the dire truth, & they used the info to profit off the pandemic. I want the SEC & CFTC to investigate this textbook case of insider trading.”