Is Trump an insider trader?

The Securities and Exchange Commission says insider trading occurs when an investor knows of ‘material nonpublic information’ and then uses that information in violation of a duty to refrain from trading or sharing the knowledge.

 Obviously, President Trump knew he was going to impose tariffs before that information went public and sent shares diving. Obviously, he knew before others did that he was going to pause them all, excepting China, before this entered the public domain and sent shares rocketing back up.

 There is no evidence that President Trump personally bought or sold shares during the wild ride that his policies engendered. If any of his associates who were close enough to be in the know did trade personally based on that information, it is likely that they would have been guilty of insider trading. There is no evidence that this happened. The markets went down and then up based on what outsiders thought would happen, and the traders who shorted Trump after the first dive guessed wrongly and lost money.

 Even if neither the President nor his associated benefitted personally, however, could he be accused of using insider knowledge to manipulate the markets to America’s advantage? This is difficult to determine because only he knows what goes on inside his head.

 In a famous exchange when Alan Greenspan was Chairman of the Federal Reserve of the United States, a reporter asked him, ‘How are you today?’ Greenspan replied, probably in jest, ‘I can’t tell you that in case it affects the markets.’

 President Trump knows what he plans to do before others do. They can guess, based on his previous behaviour, but they cannot know. It may be that the markets are volatile because the President himself is volatile. But since he does not seem to have used inside information for personal gain of himself or his relatives and close friends, any charge of insider trading does not stick.

 If he had sold some of his holdings before announcing tariffs, or had bought into the market before announcing their suspension, it would have been different. But there is no evidence that he did either, so he did not behave illegally and will not have to pardon himself.

Madsen Pirie