MW Can a president break insider-trading laws? Trump's Truth Social post ignites fierce debate.

By Chris Matthews

Six Democratic Senators sent a letter Friday to the chair of the Securities and Exchange Commission requesting an investigation.

President Donald Trump's announcement of a 90-day pause on most new tariffs sent stocks surging late Wednesday, with the S&P 500 SPX mounting one of the largest intraday reversals in history.

The abrupt policy shift and the ensuing market rally have prompted scrutiny from Democrats, who have raised concerns that Trump allies with prior knowledge of the tariff pause could have engaged in opportunistic trading to profit from the market's reaction.

Six Democratic senators, including Senate Minority Leader Chuck Schumer of New York and Banking Committee Chair Elizabeth Warren of Massachusetts, sent a letter Friday to the chair of the Securities and Exchange Commission requesting an investigation into the incident.

They pointed to a post on Truth Social the president made a few hours before his tariff reversal urging his followers to buy stocks, and argued that it showed a willingness to tip off insiders to his plans.

"It is unclear which officials and affiliates of President Trump had advance knowledge of his plans to delay tariffs, but insiders may have known that he was going to announce a tariff pause and that the market would improve," the Democrats wrote to SEC Chair Paul Atkins Monday.

The White House pushed back on these accusations.

"It is the responsibility of the President of the United States to reassure the markets and Americans about their economic security in the face of nonstop media fearmongering," White House spokesperson Kush Desai told MarketWatch.

"Democrats railed against China's cheating for decades, and now they're playing partisan games instead of celebrating President Trump's decisive action [Wednesday] to finally corner China," he added.

Democrats have put forward no evidence of illegal or unethical trading on the part of the president or any of his associates.

But the week's events have sparked a broader discussion over trading laws and whether they're equipped to prevent White House officials and other associates of a president from profiting on inside knowledge.

Are presidents subject to insider trading laws?

Presidents are explicitly subject to laws prohibiting insider trading, and that's been the case since at least 2012, when the Stock Act was passed with bipartisan support in Congress. The law clarified that the president, vice president, members of Congress and most executive-branch employees are all bound by prohibitions against trading on material nonpublic information obtained through their official duties.

Even before that law, courts had found that executive-branch officials could be held liable under insider-trading laws, particularly through what's known as the "misappropriation theory." That legal framework, endorsed by the Supreme Court, allows prosecutors to charge individuals who misuse confidential government information in a violation of their duty to the public.

"The Stock Act eliminated any doubt that the president and vice president are subject to the same insider-trading prohibitions as everyone else," said Donna Nagy, an expert on insider-trading laws at the Indiana University Mauer School of Law.

Nagy said that the knowledge of the tariff pause could be considered material nonpublic information in this context, but who could be found liable for insider trading in these situations is very fact-dependent.

If the president shared the information with advisors in the normal course of his duties, and his advisors traded on that information, those advisors could have acted unlawfully, but the president wouldn't have done anything wrong.

On the other hand, if the president gave the information as a gift to an associate with the intent of having that associate profit from it, both the president and the advisor could run afoul of laws preventing the misuse of the information, Nagy said.

Furthermore, a recent Supreme Court ruling said that presidents are immune from criminal prosecution for "official acts," defined as conduct carried out within the scope of a president's constitutional duties. That decision could further complicate any attempts to bring criminal insider-trading charges against a president.

Can administration officials be sanctioned?

Executive-branch officials have occasionally been charged and convicted for misusing information gleaned from their government work to profit in financial markets.

These are typically career government workers, as in the case of a former Food and Drug Administration chemist who profited from confidential drug-approval information, or Federal Reserve staffers who profited from disseminating inside information on regulatory investigations.

Nagy has found no examples in her research of high-level political appointees who have been sanctioned for violating insider-trading laws.

Meanwhile, concerns over the separation of powers and the president's "executive privilege" can stop investigators, courts and Congress from uncovering information about conversations the president has had with officials and advisors, making it practically very difficult to ever sanction the president or other White House officials, Nagy told MarketWatch.

"To know whether any laws were broken would take a lot of investigation. You'd have to know what was said to whom and when," and it's unlikely we'll ever get that information, said Kedric Payne, general counsel and ethics expert at the Campaign Legal Center, an ethics watchdog group.

Payne argued that Congress should pass stricter regulations blocking both legislators and executive officials from owning individual stocks, and to improve disclosure around ownership of assets like index funds so the public can better monitor for potential corruption.

He said he hopes the incident focuses the public on broader issues of unethical behavior, including the president's promotion of meme cryptocurrencies and Tesla $(TSLA)$ cars, as well as potential insider-trading violations.

"I'm concerned there's too much focus on the legality of these things and not enough on whether it was ethical," Payne told MarketWatch. "You just can't have a federal official saying when people should buy into the market, because it erodes public trust. It raises the question of whether elected officials are working for the public, or just for themselves."

-Chris Matthews

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April 11, 2025 15:19 ET (19:19 GMT)

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