Democrats Seek Insider Trading Probe After ‘Trump Chaos’ Article

October 22, 2019by Ben Bain and Matt Robinson
U.S. Rep. Kathleen Rice (D-NY) speaks to the press at the Lower Manhattan Security Initiative Command Center on Aug. 17, 2016 in New York City, N.Y. Rice and Rep. Ted Lieu requested a federal investigation last week into the timing around sales of e-mini futures contracts related to Trump. (Albin Lohr-Jones/Pacific Press/Zuma Press/TNS)

WASHINGTON — Democratic lawmakers are increasingly demanding that U.S. authorities investigate allegations raised in a recent magazine article that traders might be using nonpublic government information to reap huge illegal profits, even as the exchange where the transactions purportedly took place called the story “patently false.”

In a Monday letter, 14 Democratic senators urged the heads of the Justice Department, FBI, Commodity Futures Trading Commission and Securities and Exchange Commission to probe “disturbing reports of suspicious trading in our futures and equities markets” described in a Vanity Fair piece. The magazine referred to the transactions as “Trump Chaos Trades.”

Since the story’s publication, the suggestion that White House leaks could be a factor in futures traders making billions of dollars from well-timed bets ahead of major geopolitical announcements has fueled endless chatter from Washington to Wall Street. Still, the article has been met with widespread skepticism from the financial industry.

CME Group Inc., the world’s biggest futures exchange, has dismissed the claims, arguing that the trades highlighted in the story couldn’t have been based on inside information because too many market participants were involved. The article describes five big transactions in S&P 500 e-mini futures from June 28 to Sept. 13, ranging from 55,000 to 420,000 contracts.

“As it relates to the Vanity Fair article published on October 17, 2019, regarding activities in the E-mini S&P futures contract, the allegations about the trading activity are patently false,” CME said in an Oct. 18 statement.

In Monday’s letter, Democrats said they wanted federal authorities “to investigate immediately whether any rules, laws or regulations were violated.” The lawmakers added that “if any wrongdoing is uncovered, we demand that you swiftly hold violators accountable to the fullest extent possible.”

Spokesmen for the SEC and Justice Department declined to comment, while spokesmen for the FBI and CFTC didn’t immediately respond to requests for comment.

The wagers cited by Vanity Fair were made shortly before market-moving news — three times involving the U.S.-China trade war, once involving the bombing of Saudi oil fields and once involving Hong Kong politics. Thanks to market reactions, the magazine said, people involved in the transactions could’ve booked gains of between $82.5 million on the smallest to $1.8 billion on the biggest.

The story’s author, William D. Cohan, has said that finance professionals with decades of experience alerted him to the trades. Cohan, a former Bloomberg Opinion columnist, has said that factors other than illegal buying-and-selling could explain the transactions and that he doesn’t know whether any nefarious activity actually occurred.

Earlier Monday, Angus King, an independent Maine senator who caucuses with the Democrats, also called on the SEC to investigate. Last week, Democratic Reps. Ted Lieu and Kathleen Rice requested a federal investigation into the timing around sales of e-mini futures contracts before significant geopolitical events or statements from Trump.

———

Nick Baker contributed to this story.

———

©2019 Bloomberg News

Visit Bloomberg News at www.bloomberg.com

Distributed by Tribune Content Agency, LLC.

Finance

NY Stock Exchange Reopens for First Time in Two Months
Finance
NY Stock Exchange Reopens for First Time in Two Months
May 26, 2020
by Dan McCue

The trading floor of the New York Stock Exchange reopened Tuesday, and though it was largely seen as a symbolic first step toward economic recovery, the financial markets opened with a surge of optimism. In early trading, the Dow Jones Industrial Average was up 600 points,... Read More

Ratings Agency Says Non-Bank Mortgage Lenders Face 'Intense' Liquidity Crunch
Economy
Ratings Agency Says Non-Bank Mortgage Lenders Face 'Intense' Liquidity Crunch
April 3, 2020
by Dan McCue

WASHINGTON - The rating agency Moody's downgraded its outlook for non-bank mortgage lenders in the U.S. from "stable" to "negative" on Thursday, warning the industry faces "intense" liquidity problems due to the ongoing coronavirus outbreak. As previously reported in The Well News, nonbank lenders like ABC... Read More

Burr Faces Lawsuit Over Sale of Up to $1.7 Million in Stock
Litigation
Burr Faces Lawsuit Over Sale of Up to $1.7 Million in Stock

CHARLOTTE, N.C. — Fallout continued this week over revelations that U.S. Sen. Richard Burr dumped up to $1.7 million in stock after private briefings about the coronavirus, including a personal lawsuit against him. Politico reported the shareholder suit against Burr in U.S. District Court for the... Read More

Warren Stand on Private Equity Under Scrutiny at House Hearing
Finance
Warren Stand on Private Equity Under Scrutiny at House Hearing
December 6, 2019
by Dan McCue

WASHINGTON - Massachusetts Sen. Elizabeth Warren may score political points with the far left-wing of her party by vowing to rein in the ills of the private equity industry, but her proposals came under fire at a recent House Financial Services Committee. Warren's Stop Wall Street... Read More

Zuckerberg Threatened With Facebook Breakup
Congress
Zuckerberg Threatened With Facebook Breakup

WASHINGTON — Facebook CEO Mark Zuckerberg faced a threat to break up his company as a congressional hearing opened on the social media giant’s proposal to establish a cryptocurrency, Libra. The cryptocurrency proposal drew scrutiny due to Facebook Inc.’s enormous base of more than 2 billion... Read More

Democrats Seek Insider Trading Probe After ‘Trump Chaos’ Article
Finance
Democrats Seek Insider Trading Probe After ‘Trump Chaos’ Article

WASHINGTON — Democratic lawmakers are increasingly demanding that U.S. authorities investigate allegations raised in a recent magazine article that traders might be using nonpublic government information to reap huge illegal profits, even as the exchange where the transactions purportedly took place called the story “patently false.”... Read More

Straight From The Well
scroll top