President Donald Trump’s announcement that he was in “productive” peace talks with Iran on Monday morning was a surprise. But an unusual burst in trading activity just 15 minutes before his announcement has raised questions about whether people with access to inside information about the announcement attempted to illegally profit from it.
Trump’s announcement immediately pushed the price of oil down, because it signaled that his war on Iran might be coming to an end sooner rather than later. That would potentially free up the roughly 20% of the global oil supply that has largely remained stuck in the Persian Gulf due to Iran’s stranglehold on the Strait of Hormuz. Traders who bet on the unexpected Trump news positioned themselves to make money from the price of oil dropping.
It is very difficult to believe these bettors would place that amount of money, moments before an official announcement that would impact oil prices, based on simple chance.”
Craig Holman of Public Citizen
As Bloomberg News reports, “Futures for oil and stocks worth billions of dollars changed hands just 15 minutes before a social media post from U.S. President Donald Trump sent crude prices tumbling and equities soaring.” Bloomberg notes that the number of contracts exchanged corresponded to almost 10 times the average volume of crude oil contracts traded in the same time period over the five trading days preceding the announcement. Additionally, a “similar increase in activity in U.S. stock futures was observed on the S&P 500 with about 6,000 contracts traded, representing more than $2 billion in notional value. That was a sharp spike against an otherwise quiet premarket session.”
Multiple market analysts have described the trading activity as unusual, and worthy of investigation.
“It is very difficult to believe these bettors would place that amount of money, moments before an official announcement that would impact oil prices, based on simple chance,” Craig Holman, the government watchdog Public Citizen’s lobbyist on ethics, lobbying and campaign finance rules, told MS NOW.
A White House spokesperson told the Financial Times that it did not “tolerate any administration official illegally profiteering off of insider knowledge.”
It’s not possible to rule out other explanations for the trader behavior, and the traders have not been identified. But that’s exactly why the matter should be investigated by U.S. lawmakers.
The possibility of insider trading — when individuals or firms trade based on market-moving information that isn’t publicly available — is important on multiple levels. Insider trading is an illegal activity that undermines trust and fairness in markets. It also raises the possibility of a grave national security breach, since the White House could be leaking acutely sensitive information about diplomacy.
This is all particularly plausible with an administration that has made it clear that it believes that there is no problem with the president and his family trying to profit handsomely from his position in public office.
As the minority party in both chambers, Democrats in Congress have limited power to hold hearings and issue subpoenas without support from the GOP, but they can still publicly raise the issue and press relevant federal agencies. Last year, Democrats in Congress rightly advocated for insider trading investigations into whether White House officials, Trump family members or congressional Republicans profited from advance knowledge of Trump’s pivot on tariffs in April, and wrote a letter calling for the Securities and Exchange Commission to probe insider trading.
If Democrats win back Congress in the midterms, they should add hearings on possible insider trading to the long list of things they need to tackle to restrain the Trump administration.
Zeeshan Aleem is a writer and editor for MS NOW. He primarily writes about politics and foreign policy.