Insider Trading Opportunities for Trump Supporters

Larry Kudlow (director of the National Economic Council) lied to the 

American people in February, falsely telling them the

 coronavirus was contained in the United States 

and that “it’s pretty close to airtight”

Back in February, when the Trump administration was lying to the American people about the pandemic being cully contained and under control, administration officials were privately telling board members of the radical conservative Hoover Institution that they were worried that the pandemic would spin out of control. This information  leaked to some Wall Street traders and they traded on the information. 

The New York Times described the response of one trader like this: “‘Short everything,’ was the reaction of the investor, using the Wall Street term for betting on the idea that the stock prices of companies would soon fall.”

The NYT writes about how traders were informed that the situation was potentially far worse than the American people were being told:

“On the afternoon of Feb. 24, President Trump declared on Twitter that the coronavirus was “very much under control” in the United States, one of numerous rosy statements that he and his advisers made at the time about the worsening epidemic. He even added an observation for investors: “Stock market starting to look very good to me!”

But hours earlier, senior members of the president’s economic team, privately addressing board members of the conservative Hoover Institution, were less confident. Tomas J. Philipson, a senior economic adviser to the president, told the group he could not yet estimate the effects of the virus on the American economy. To some in the group, the implication was that an outbreak could prove worse than Mr. Philipson and other Trump administration advisers were signaling in public at the time.

The next day, board members — many of them Republican donors — got another taste of government uncertainty from Larry Kudlow, the director of the National Economic Council. Hours after he had boasted on CNBC that the virus was contained in the United States and “it’s pretty close to airtight,” Mr. Kudlow delivered a more ambiguous private message. He asserted that the virus was “contained in the U.S., to date, but now we just don’t know,” according to a document describing the sessions obtained by The New York Times. 

The consultant’s assessment quickly spread through parts of the investment world. U.S. stocks were already spiraling because of a warning from a federal public health official that the virus was likely to spread, but traders spotted the immediate significance: The president’s aides appeared to be giving wealthy party donors an early warning of a potentially impactful contagion at a time when Mr. Trump was publicly insisting that the threat was nonexistent. (emphasis added)

Interviews with eight people who either received copies of the memo or were briefed on aspects of it as it spread among investors in New York and elsewhere provide a glimpse of how elite traders had access to information from the administration that helped them gain financial advantage during a chaotic three days when global markets were teetering.

But the memo’s overarching message — that a devastating virus outbreak in the United States was increasingly likely to occur, and that government officials were more aware of the threat than they were letting on publicly — proved accurate.”

A couple of points merit comment. First, the Trump Administration wants to protect wealthy republicans. Last February, it did that by giving those people inside information that they could trade on to protect themselves in advance of the stock market drop the pandemic caused. Second, some or most of those informed people did not hesitate to use that information to protect themselves and make money at the expense of people who did not have the same information. There was no moral qualm about illegal insider trading. In general, stock traders do not have any moral values other than profit.

Now, in October, there is almost no possibility that any person who traded on this non-public information will be prosecuted for insider trading. The Trump Administration will protect its own one way or another. Most likely, this little incident of corruption and moral sleaze will simply be dismissed as not insider trading, even though that is exactly what it was. If it was legal, that raises this question: Why limit this to elite radical conservatives? Why not tell all Americans that the government believed the pandemic could easily spin out of control and cause massive economic damage? 

When it comes to the corrupt, morally bankrupt Trump Administration, there is no reason to accord it the benefit of any doubt about sleaze like this. The track record of corruption, lies and deceit is clear and undeniable.

This is an example of how the rule of law now fails to work when applied to republican elites and probably wealthy people in general. The rest of us are still required to obey the rule of law, while the elites can do whatever they want, legal or not.