Democrats pen letter asking SEC to investigate Trump, allies for alleged market manipulation

A group of Democratic lawmakers have called on U.S. President Donald Trump or his inner circle members to investigate the Securities and Exchange Commission’s (SEC) “potential violations” of the federal securities laws.

exist A letter posted on FridayThey asked independent government agencies to investigate “President Trump, his cabinet members, other donors, insiders and executive officials were engaged in internal trade, market manipulation or other securities law violations on April 9, 2025.”

Senators Elizabeth Warren, Chuck Schumer, Ruben Gallego, Mark Kelly, Adam Schiff and Ron Wyden signed the letter.

On Wednesday, Trump suddenly announced a 90-day pause on some global “reciprocity” tariffs first announced last week, with a prolonged decline in the stock market.

Stocks soared in the news, with the S&P 500 gaining 9.5% by the end of trading on the day, while the Nasdaq composite rate rose 12.2%. The S&P 500 measures the market to earn about $4 trillion, or 70% of the value lost in the first four trading days after Trump’s announcement.

However, hours before the pause was announced, the president told his followers to invest in the stock market on his truth social networking site.

Trump wrote at 9:37 a.m.: “This is a purchase!!!

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Trump’s social media post raises questions

The letter said the timing of Trump’s posts related to the tariff suspension announcement was a question for Democrats.

It reads to some extent: “At this critical moment, the SEC must do its best to restore Americans’ belief in the rule of law and preserve the integrity of the financial system.”

When asked to comment, White House spokesman Kush Desai wrote in an email to CBC News: “In the face of uninterrupted media fears, Democrats cheating on China, rather than celebrating Chinese domination, they were reluctant to celebrate China yesterday, and it was the responsibility of the US president to make the market and Americans feel displeased with their economic security.

David Chase, who once worked as an executive at the SEC, said overall, the extreme highs and lows in stock markets over the past week do not mean anything illegal behind the scenes.

“Market volatility does not necessarily mean… there is manipulation,” Chase, now representing the SEC whistleblower, told CBC News. “It’s likely that the market is working effectively and absorbing news and responding to it.”

He added that market-based volatility may not be enough for the SEC to file a case, “just allusion and speculation.”

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Richard Painter, a corporate law professor at the University of Minnesota, and former White House chief ethics law firm during the George W. Bush administration both agreed that there is no evidence that anyone uses private information to help them trade, which constitutes insider trading – or that anyone in the Trump administration intends to influence stock prices.

But he said the president’s statement to encourage people to take action on the stock market is still very unusual, which justifies the investigation.

“There is no clear sign of insider trading. But there is this risk and potential when the U.S. president himself … can move the market to such an extraordinary level.”

“There is not always a fire in the smoke.”

Chase said allegations of insider trading and market manipulation are often difficult to prove.

Internal transactions occur when someone obtains private information about a company and uses that information to buy and sell shares in his or her own personal interest. He said this physical proof usually does not exist.

Chase said: “Most mature people know better than writing an email: ‘Hey, I have a good tip. This is. This is. Trade.’ “It’s usually done verbally. ”

Without this, he said, the SEC must compile indirect evidence when prosecuting insider trading, such as a calendar lined up between people with information and those who conduct the transaction.

Market manipulation cases are similar. Chase said the SEC must demonstrate that the purpose is to influence the value of the stock – which is difficult for many of the same reasons. He said there was no email or text of any offender, and these situations were often based on suspicious indirect evidence.

“Where there are smoke, there aren’t always big fires, but they can happen. I mean, that’s really the most we can eliminate with…cheesy analogies.”

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When President Donald Trump sticks to his tariff plan, the power group values ​​how federal leaders deal with market chaos another day.