Trump Faces Allegations of Insider Trading: An Analysis

The volatile market swings following former President Donald Trump’s recent tariff announcements have triggered calls for investigations into possible market manipulation and insider trading. The controversy centers on Trump’s social media activity just before a major policy reversal that sent markets soaring.

The stock market experienced significant turbulence after Trump announced a 10% baseline tariff on all imported goods on April 2, along with additional taxes on imports from 60 countries. A week later, on April 9, Trump suddenly paused most of these tariffs for three months, while maintaining the baseline tax and increasing levies on Chinese imports.

Markets responded dramatically to the policy reversal. The S&P 500 surged more than 9% on Wednesday afternoon following the announcement of the “90-day pause.” However, volatility returned Thursday when the Dow plunged 1,900 points and the S&P 500 fell 5%.

What raised eyebrows among lawmakers was Trump’s activity on his social media platform, Truth Social, in the hours before announcing the pause. As markets remained in negative territory, Trump posted: “THIS IS A GREAT TIME TO BUY!!!” notably signing the message with his initials “DJT” – which also happen to be the stock ticker symbol for his company, Trump Media and Technology Group Corp.

Following Trump’s tariff reversal announcement, shares of Trump Media and Technology Group shot up nearly 22% on Wednesday, with an additional 5% gain in pre-market trading early Thursday.

Senator Adam Schiff, a California Democrat, called for an investigation into Trump’s “great time to buy” post on Wednesday, describing it as potential evidence of insider trading or stock market manipulation. “Family meme coins and all the rest of it are not beyond insider trading or enriching themselves. I hope to find out soon,” Schiff told TIME.

The U.S. Securities and Exchange Commission defines market manipulation as “someone artificially affects the supply or demand for a security,” which can include spreading false information or creating an artificial appearance of market activity. Insider trading involves “buying or selling a security, in breach of a fiduciary duty or other relationship of trust and confidence, on the basis of material, nonpublic information about the security.”

Schiff and Senator Ruben Gallego, an Arizona Democrat, sent a letter to Trump’s White House Chief of Staff Susie Wiles and Jamieson Greer, Acting Director of the U.S. Office of Government Ethics, requesting a review of “any communications between White House and executive branch agency employees… and external parties, including financial institutions, brokers, dealers… that may have included non-public information.”

Representative Alexandria Ocasio-Cortez also weighed in, calling for all members of Congress to disclose stocks purchased in the previous 24 hours. “I’ve been hearing some interesting chatter on the floor,” she wrote on X. “Disclosure deadline is May 15th. We’re about to learn a few things. It’s time to ban insider trading in Congress.”

Schiff’s inquiry specifically mentioned Elon Musk, who has a prominent role in the Trump Administration through the Department of Government Efficiency (DOGE). “[Stock] in Elon Musk’s company, Tesla, increased 18% immediately following the President’s announcement to pause most tariffs, which Mr. Musk had publicly opposed,” Schiff noted.

House Minority Leader Hakeem Jeffries announced that House Democrats would launch investigations into “possible stock manipulation.”

Legal experts offer mixed assessments of the situation. Karen Woody, professor of law at Washington and Lee School of Law, called an investigation “valid,” saying, “This isn’t a witch hunt… This is a pretty clear example of what we would say is some potential of real market manipulation by someone who has the ability to move the markets.”

However, Adam Pritchard, law professor at the University of Michigan, argued that Trump’s Truth Social post was “pretty clearly not insider trading” unless there’s evidence that Trump himself was trading or providing detailed information privately to others who then traded.

Kevin Douglas, assistant law professor at Michigan State University, highlighted the complexity of insider trading law, noting there are no federal statutes explicitly prohibiting it, and current case law doesn’t provide clear guidance. “The Stock Act, which prohibits the President and federal employees from trading on non-public information, defines non-public information in a way that keeps the law fatally ambiguous,” Douglas explained.

Woody pointed out the unique circumstances of this situation: “This is an instance where you have the creators of the crisis, then those who are able to either throw fuel on the fire or try to douse it all, being the same people. These [Trump] tariff policies are what created this market crash. And then [with] the stroke of—not even the pen, but [Trump’s social media post]—you can fix that. Of course people who know about that are able to take a significant advantage.”