What is Insider Trading?

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What is Insider Trading?

🧭 What’s Going On?

Congressional Insider Trading Allegations Amid 2025 Trade Wars

• In April 2025, President Trump announced sweeping tariffs—dubbed “Liberation Day” tariffs—on numerous countries, leading to a significant stock market crash. ​

• Shortly after, he posted on Truth Social: “THIS IS A GREAT TIME TO BUY!!! DJT”, just hours before pausing the tariffs for 90 days, causing markets to rebound. ​

• Democratic lawmakers, including Senators Elizabeth Warren and Adam Schiff, called for investigations into potential insider trading and market manipulation, questioning whether Trump or his associates profited from prior knowledge of the tariff pause. ​

• Representative Alexandria Ocasio-Cortez urged lawmakers to disclose recent stock purchases and renewed calls to ban insider trading in Congress. ​

• The Securities and Exchange Commission (SEC) has been urged to investigate these allegations, though no formal proceedings have been announced yet. ​

🧠 Explainer: What Is Insider Trading?

• Definition: Insider trading involves buying or selling a security based on nonpublic information about the security. ​

• Legal vs. Illegal:

  • Legal: Corporate insiders trading company stock and reporting the trades to the SEC.

  • Illegal: Trading based on confidential information, violating a duty of trust.​

• Market Manipulation: Deliberate actions to interfere with the free and fair operation of the market, such as spreading false information to influence stock prices. ​

• Consequences: Penalties can include fines, disgorgement (forced surrender) of profits, and imprisonment.​

🧩 Pop Quiz

Question: What action by President Trump in April 2025 led to allegations of insider trading?​

A) Announcing new tariffs on multiple countries.​

B) Posting on social media that it was a "great time to buy" stocks just before pausing tariffs.​

C) Launching a new cryptocurrency.​

D) Attending a golf tournament during the stock market crash.​

Answer: B) Posting on social media that it was a "great time to buy" stocks just before pausing tariffs.​

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