When Does Manipulation of the Markets Become Insider-Trading?

Financial markets, such as common and preferred shares of public companies, funds that track indexes, commodities, or sectors and trade like stocks and such, are all extremely vulnerable to both news events and the statements of those who impact their movement. That’s why we have laws about leaking such information prior to its public knowledge.

That’s called ‘inside trading’ and the penalties for its misuse are steep.

Federal Felony Charges, which is what we’re talking about on the scale it’s currently happening, includes prison for up to 20 years, and fines up to $5 million for individuals. The civil penalties include up to 3 times the profit gained or loss avoided, and a ban from serving as an officer/director of public companies, usually for life. It's prosecuted under laws such as the Securities Exchange Act of 1934, and Rule 10b-5 (anti-fraud provision).

So, what happens when the perpetrator is the president of the United States?

Good question, and I’m not sure we’ll find out in the current legal environment, because the Orange Man’s history is one of breaking laws and avoiding prison. Fines and judgements are another matter. So far as we know, he’s ponied up $25 million to dissatisfied students at Trump University (including closing it down), a $454 million civil fraud judgment in New York ($175 million bond posted, while under appeal).

Then there’s two cases involving E. Jean CarrollFirst Case (2023): Trump was found liable for sexual abuse and defamation, resulting in a $5 million award to Carroll. The Orange Man went public with some nasty comments, so in a second trial, a jury awarded Carroll an additional $83.3 million for defamation. Man just can’t keep his mouth shut (both cases being appealed).

But those amounts are nothing, compared to an up-and-down Stock Market during a now-you-see-‘em, now-you-don’t tariff war.

In April, when Orange Man first announced his global trade policy, over $6.6 trillion was wiped out of the stock market in two days. It recovered a bit as he reversed some tariffs, then dropped again, and see-sawed with every whim. Hundreds of billions were lost and gained, but the interesting aspect of Wall Street is that profit can be made selling-short just before a fall and buying before a gain.

That depends upon knowing when the rise and fall is going to happen. And who knew, other than the Orange Man?

He may have been his own insider trader.

Which is why, if Jamie Dimon, Chairman and CEO of JPMorgan Chase, makes a move that significantly impacts its stock price, he better not be caught making prior trades. And he doesn’t. Corporate leaders are very careful about that.

If I were the Federal Trade Commission, the Commodity Futures Trading Commission, the FBI or Justice Department, I’d be very interested in what trades were made, and by whom, during those periods of tariff manipulation.

With the Orange Man’s fingers sticky with control of all those Federal agencies, we are unlikely to ever find out.

But a surmise might not be out of order.

One (certainly not me) might surmise that a whisper mightpossibly have found its way to the specific ears of specific billionaires. The Orange Man has been very generous with tax cuts for this favored group, and the renewal of one is currently on the House docket. That’s expected to be unpopular with the Maga Crowd, but there are other ways to bind a wound, and one might surmise this to be one.

Who would know, but the insider?

The fairest tariffs are zero across the world.

But there’s precious little profit in that.

Stay tuned to see some minor offenders take the heat.