Rick on MS Now: Trump's new insider-trading scheme
Trump's plan to sell early access to his Truth Social posts might break the law. Some investors will probably try it, anyway.
I joined MS Now on August 2 to talk about President Trump’s social media company selling early access to its posts. Can he really do that? Maybe so. Here’s the video. Bullet points below.
Trump’s plan is to sell early access to posts on his Truth Social network for a fee of $100,000 per month. Trump’s company, Trump Media & Technology Group, owns Truth Social.
Other social networks charge a fee for early access, which can amount to just seconds or even a fraction of a second before a post goes public. Investing firms use high-speed computers to track all sorts of data, including the social media posts of prominent people who might be able to move markets. If computers spot a trading opportunity, they can place the trade before others without early access get the info.
The difference with Truth Social is that the president of the United States owns it! And he regularly makes social media statements that move markets. The Wall Street Journal, for instance, recently analyzed several instances of Trump post affecting the stock price of companies such as US Steel, Intel, and Raytheon. Oil prices often rise or fall based on Trump posts about the status of peace negotiations in the war with Iran.
[See why markets are manic right now]
Is selling early access to presidential statements legal? Unclear, as with many of Trump’s profit-making schemes. There are laws that prohibit the use of insider information to make a profit. But Trump might argue that his social media company has the same right to offer an upgraded pricing tier as any other platform. Courts will probably decide.
Will any investing firms give this a shot? A few probably will. Hedge funds and other types of trading shops spend a lot of time and effort seeking any edge that might help them make money. Some probably won’t be bothered by the potential illegality. But most will probably take a pass. One problem is the question of what might happen if courts ban Trump from selling early access to his posts. Would that make any firm that profited from early access guilty of insider trading? And if Democrats win control of either house of Congress in the midterm elections, they could hold hearings exposing firms making money off Trump’s posts.
One fun aspect of the whole controversy is that Trump Media & Technology Group is a public company—which means it has to disclose important sources of revenue in its quarterly reports. The names of any companies paying for info might remain confidential, but if Trump’s company makes meaningful money by selling early access, we’ll know—unless the company illegally suppresses the information.
Bottom line: Nobody ever imagined a politician who would monetize the presidency as Trump has.
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