Trump is suspected of market manipulation

Author: Yicai  Gaoya

On the morning of April 9, about half an hour after the U.S. stock market opened, U.S. President Trump posted on his social platform, declaring "Now is a great time to buy!" and attached the words "DJT" - this is both the abbreviation of his name and the stock code of Trump Media Technology Group (TMTG).

Less than four hours later, Trump announced through social media without warning that the implementation of reciprocal tariffs would be suspended for 90 days. The market responded quickly and the stock market soared across the board. The S&P 500 index closed up more than 9%, the Nasdaq index dominated by technology stocks rose more than 12%, and the stock price of Trump Media Technology Group soared 22% that day.

Trump's dynamics and the timing of the sudden change in tariff policy have raised questions about market manipulation and insider trading. "Any member of Congress who has bought stock in the past 48 hours should now disclose those transactions," said Democratic U.S. Rep. Alexandria Ocasio-Cortez that day. "I've heard a lot of rumors in Congress."

At the same time, Trump's allies Musk and U.S. Commerce Secretary Howard Lutnick are also embroiled in "conflict of interest" disputes. Calls for internal investigations in the U.S. Congress are growing, and whether lawmakers and federal employees use their public office for personal gain has once again become the focus of public attention.

Members of Congress call for an investigation into insider trading

Trump's sudden shift in tariff policy has attracted widespread attention on Capitol Hill, with several lawmakers questioning whether it involves insider trading.

House Minority Leader Hakeem Jeffries, D-N.Y., called for a thorough investigation of "possible stock market manipulation," including "whether members of the House Republican Conference knew in advance of Trump's decision to delay his reckless tariff policy." He did not directly accuse of illegality, but stressed the need to clarify the transparency of recent stock trading.

Rep. Maxine Waters, the top Democrat on the House Financial Services Committee, wrote to the U.S. Securities and Exchange Commission (SEC) and the U.S. Government Accountability Office (GAO) to investigate possible insider trading and market manipulation violations surrounding the tariff announcement. She wrote: "Given the uncertainty of the timing of the President's private decision to suspend tariffs and the multiple meetings he held during this period (including meetings with members of Congress), it remains an open question as to who had this important, non-public, market-moving information."

Rep. Adam Schiff, D-Calif., also wrote to the White House asking for information to investigate whether current or former officials knew in advance of the decision to postpone tariffs and profited from it. He said: "The coincidence of this timing is hard to ignore. We must determine whether someone has used their close relationship with the former president to seek personal gain through privileged information... Policy inconsistency provides dangerous opportunities for insider trading."

Democratic Senator Tim Kaine of Virginia also said that public doubts are deepening, saying "even my barber is asking if Trump is shorting stocks or making profits for himself."

However, the White House denied that Trump had manipulated the market and accused the Democrats of "playing partisan games." Trump's press secretary Karoline Leavitt said this reflects Trump's "art of the deal." U.S. Treasury Secretary Bessant also explained that the suspension of tariffs was to leave room for customized negotiations with allies.

On the evening of the 9th local time, when reporters asked Trump when he decided to suspend tariffs on most countries, he replied: "It's been a while. I can say, this morning. I have been thinking about it for the past few days."

Musk and others are also caught in "conflict of interest" doubts

The cloud of doubt not only shrouds Congress, but also affects Trump's close allies.

Recently, New Hampshire Democratic Senator Jeanne Shaheen proposed a bill to prohibit the granting of government contracts or grants to companies in which special government employees hold more than 5% of the shares, targeting Musk, who was appointed as the head of the Department of Government Efficiency (DOGE).

Currently, Musk's SpaceX and Starlink are signing or negotiating more contracts with US federal government agencies. For example, after Trump took office, the U.S. Department of Commerce announced that it would overhaul the rules for the Biden administration to issue grants through the Broadband Equity, Access, and Deployment (BEAD) program. It is reported that this change may increase Musk's satellite Internet service company Starlink's share of the program from about $4 billion to $20 billion. In addition, the Federal Aviation Administration (FAA) will also transfer air traffic control infrastructure upgrades and route contracts to Starlink. In February, the FAA confirmed the deployment and testing of Starlink equipment at multiple facilities.

In March, White House officials also confirmed that Starlink "donated" Internet services to the White House. The move prompted Democrats on the House Oversight Committee to express "deep concern" in a letter to the government. The letter reads: "Donations like this raise significant red flags and raise questions about whether Musk is using his federal government position to benefit his company."

According to Section 208 of Chapter 18 of the United States Code, federal government employees are prohibited from participating in any government affairs that may directly or substantially affect their own financial interests, including the interests of their spouses, minor children, or affiliated companies. This includes decision-making, contract awards, regulatory affairs, etc. In addition, the U.S. Office of Government Ethics (OGE) has also established rules requiring employees to avoid matters involving their financial interests.

In addition to Musk, hedge fund giant and Pershing Square founder Bill Ackman accused Lutnick's company Cantor Fitzgerald earlier this week of profiting from market fluctuations through bond holdings. Although Ackman later withdrew the allegations, he did not delete the relevant posts.

Legislative efforts to curb insider trading

The No Trading on Congressional Information Act, passed in 2012, explicitly prohibits members of Congress and federal employees from trading on non-public information obtained from their positions, and requires them to disclose financial transactions of more than $1,000 within 45 days of the transaction.

However, the law is poorly enforced and has long been criticized for its lack of binding force. In recent years, both Democratic and Republican lawmakers have been criticized by the public for suspicious transactions that coincide with confidential briefings or legislative actions.

According to an analysis of lawmakers' regular trading reports by financial startup Unusual Whales, many lawmakers' trading returns far exceed the S&P 500. In 2024, the average trading return of Democratic lawmakers rose by about 31%, while Republican lawmakers rose by 26% and the S&P rose by 24.9%.

For example, former House Speaker Nancy Pelosi has long attracted attention for her husband Paul Pelosi's large stock transactions. There are even popular investment accounts such as "Nancy Pelosi Stock Tracker". Some investors even imitate her transactions and regard her as a "market vane". For example, in 2024, a few weeks before the U.S. Department of Justice filed an antitrust lawsuit against Visa, Paul Pelosi sold $500,000 worth of Visa shares to avoid a drop in stock prices. In 2024, Pelosi's stock gains are estimated to be 70.9%.

Earlier this year, Ocasio-Cortez and other lawmakers proposed the "Bipartisan Act to Restore Government Credibility", hoping to prohibit members of Congress, their spouses and their minor children from trading or holding individual stocks during their terms.

“The ability for individuals to trade stocks erodes the public’s trust in government,” she said. “We shouldn’t be trading on the stock market when lawmakers have access to classified information. It’s that simple.”