What the president and his associates are doing is probably illegal. Whether any legal action could successfully be brought is another matter.
What the president and his associates are doing is probably illegal. Whether any legal action could successfully be brought is another matter.
Y et again, an appalling example of profiteering off the nation’s highest office by Donald Trump and his family illustrates that the legal system is not equipped to address abuses of executive power. In our system, either Congress acts or there is no remedy any time soon, perhaps ever.
To summarize, the Trump Media & Technology Group (TMTG) that Trump formed to own and operate his Truth Social media platform is selling early access to his posts — assertions about government policy that are known to cause significant swings in market prices — to high-frequency traders (HFTs) for up to $100K per month. This enables the HFTs to execute trades at computerized scale an instant before Trump’s posts are accessible to the general public (i.e., to Truth Social subscribers who haven’t paid the special fee, some of whom customarily repost Trump’s assertions on more popular media outlets). The pricey fees, which are well worth it to the HFTs given the hefty profits they can turn trading off this early access to material information, generate millions of dollars in revenue for TMTG — of which Trump owns 41 percent.
TMTG insists that this is all perfectly legal and unremarkable. It’s not like the president is a business executive tipping off family or intimate friends about blockbuster developments at one of his companies so they can buy or sell stock before the information becomes public. He’s a political official. And the news that TMTG is selling is not insider corporate intelligence; his posts are about public policy.
But what about selling privileged, early access? Nothing wrong with that either, says TMTG. After all, big for-profit financial new outlets such as Bloomberg sell their reporting, and it’s deemed legitimate to charge a premium for early access. Such access is typically purchased by HFTs, enabling them to practice “latency arbitrage” — i.e., by acquiring reports about price information micro-seconds before they reach the broader market, an HFT can make massive electronic trades on exchanges where the new pricing information is still unknown, a huge advantage.
Yes, all so Jesuitical . . . and such BS.
Trump holds the nation’s highest office of public trust. He is not merely reporting news; he is making news about public policy that he knows will move markets — tumultuously if he’s hysterical enough about it, as his “Truths” often are. He is not using governmental channels underwritten by public funds. He is using a private outlet that his corporation owns to announce public policy and official executive actions; and now, his company has rigged access to these announcements so that people willing to pay can line TMTG’s pockets. And they are quite willing to pay because the monthly fees, while lucrative for TMTG, are dwarfed by the profits HFTs can make on trades executed before news of Trump’s posts reaches other market participants. As for the facile analogy to financial news outlets: Bloomberg is selling its own reporting about markets (not about itself) to customers; TMTG is selling news about the vital interests of the United States of America that has been created by the republic’s most powerful public servant.
What the president and his abettors are doing is probably illegal for reasons we’ll come to. Those reasons have been meticulously outlined by Harvard’s John Coates, the former general counsel of the Securities and Exchange Commission (in the Biden administration), in an article co-written with four academics renowned in business circles (they call themselves the “Shadow SEC”). This week, he discussed the article in an interview by Harvard’s Jack Goldsmith (who led the Justice Department’s Office of Legal Counsel in the Bush-43 administration) — 15 minutes that are worth your while.
Whether any legal action could successfully be brought against the president is less clear. We’ll come to that, but my point — readers could fairly say it’s become my hobby horse for more than a dozen years — is that the legal system is not equipped to effectively address such presidential abuses of power. Regardless of whether such misconduct is illegal or “merely” a sleazy betrayal of the public trust, the Constitution vests Congress alone with the capacity, and the duty, to address executive misconduct.
The current Congress, sadly, is a model of dereliction.
In 2021, starting to execute his unlikely comeback after his first term’s ignominious conclusion, President Trump formed TMTG, a publicly traded company that owns and operates Truth Social. Whatever realistic ambitions he and his partners may have had for growth of this private social media platform, Trump’s own posts were its revenue driver. The idea was to monetize them . . . just as the now-president has hawked everything from meme coins to watches to gold sneakers to, yes, Bibles. That is why Trump agreed to a six-hour delay period between his Truth Social posts and his reposting of them (or commentary about them) on X (formerly Twitter) or other much larger, more established media outlets. TMTG generates revenue by enticing subscribers to Truth Social; there would be little reason to subscribe if Trump’s posts could be easily accessed elsewhere. (Subscribing is free. Trump and his TMTG partners hoped to make money from advertising and a streaming service that would be boosted by a robust subscription base. To this point, it’s been a flop.)
Nothing changed when Trump took office in January 2025. Although he is notoriously available to the media — even as he undertakes to ban from the White House some outlets whose coverage he doesn’t like — the main avenue by which the president of the United States has chosen to communicate with the American public and the world at large is his for-profit Truth Social soapbox, owned and operated by his for-profit TMTG corporation.
While he is president, Trump’s 41 percent share of TMTG is parked in a trust and therefore, technically, he does not control it — although he does proportionally benefit (or lose) from its profits (or losses). Notably, however, it is a revocable trust, which means he can end the arrangement at his discretion (it’s not an irrevocable trust placing the assets beyond his control for a set period of time). In addition, the trustee controlling the assets is Donald Trump Jr., the president’s eldest son and top subordinate in the Trump Organization (the president’s real estate–turned-branding empire). Don Jr. also just happens to sit on the TMTG board. Indeed, he is the most visible and influential board member; in April for example, when TMTG parted company with its chief operating officer, Devin Nunes (the Republican former representative from California), Don Jr. made the announcement.
Despite the news value of Trump’s posts, which was obviously enhanced when he became president for the second time, Truth Social remains small and TMTG is a troubled venture. For the twelve months ending this past June, it took in just $4.5 million in revenue and had an operating loss of $544 billion. TMTG’s total net loss was well over twice as big — approximately $1.3 billion — owing to steep declines in the value of its investments. It is because of those investments, not the social media business, that TMTG is still said to be worth $2.5 billion. But that is down from $8 billion (on paper, shortly after it began trading); as this is written, the stock price is just a shade over $9, down from $70 per share coming out of the gate.
Clearly, TMTG is desperate to show that Truth Social can generate revenue. Two months ago, the company announced its establishment of an “application programming interface.” It’s a way for one computer system to feed data automatically to another. Truth API started running on August 1. HFTs that purchase the service — for a monthly fee of $60K to $100K — receive President Trump’s posts as a machine-readable data stream the instant they are sent, micro-seconds before they are posted on the Truth Social website or app. With instant, algorithmic computer trading capability, that instant of advance notice is a coup. At least ten trading companies have reportedly purchased the service.
What they are buying is the president’s unique ability to move markets. As Axios reports, for example, only hours after Truth API launched, Trump announced that he’d canceled planned strikes against Iran, sending global oil prices plummeting 5 percent. Not surprisingly, Axios adds that TMTG shares rose by 7 percent in the days following the Truth API rollout. At the top price range, the service will generate $1.2 million per customer per year.
It smells like insider trading, but it’s not — at least in the traditional sense. Trump is not trading in commercial paper, nor is he a corporate officer. TMTG laughably claims there is no material nonpublic information at issue, on the rationale that once the president makes an utterance to be broadcast on social media, it is public regardless of who hears it first. But the company does have a point in contending that the information is not company intelligence available only to corporate insiders — the customary grist for insider trading prosecutions.
Yet, as Professor Coates points out, the simplest legal analysis is against the backdrop of the 2012 STOCK legislation — the Stop Trading on Congressional Knowledge Act (codified at Section 78u-1(h) of the federal securities laws) signed into law by President Obama amid a scandal over profiteering off political office. Although lawmakers were the main culprits at the time, Congress studiously dragged the full range of federal officials into the net, including not only executive branch employees but also, explicitly, the president. The act makes clear that the president and other federal officials owe a fiduciary responsibility to the public that is violated when they cash in, or knowingly abet others in cashing in, on nonpublic information that they possess and can act on because of their privileged positions.
There is a pending lawsuit, brought against the president and some of his top aides by left-leaning activists, The Intercept, and the Freedom of the Press Foundation. As already noted, however, there are significant hurdles to legal action. The lawsuit does not cite the STOCK Act. Instead, it makes questionable constitutional claims that (a) the First Amendment is violated when the government denies equal access to the president’s public announcements, and (b) TMTG’s hefty early-access fee amounts to an illegal “taking” under the Fifth Amendment. Even if we assume for argument’s sake that these claims are viable, the Supreme Court’s 2024 immunity ruling (Trump v. United States) would complicate proving the case. That decision not only immunizes from prosecution the president’s official acts (and speaking to the public about government policy is an official act) but suppresses evidence of such acts. And once an act is deemed official, courts will not examine the president’s possible motive, even if it seems patently corrupt.
As Coates argues, the STOCK Act, which can give rise to criminal prosecution and civil lawsuits, is on stronger footing because Congress specifically included the president among the officials liable to be charged. Despite its clarity on that point, the statute probably would not nullify presidential immunity, which the Court found to be of constitutional pedigree. Nevertheless, while the president’s policy announcements are official acts, his establishment prior to his presidency of for-profit communications ventures are private acts, carrying no immunity. That said, even if Trump’s immunity were entirely stripped away on the theory that the act’s public character is extinguished by the use of a private communication vehicle (doubtful), there would remain a proof problem: Trump could counter that he does not control TMTG and that (notwithstanding his apparent suasion over Don Jr. and other TMTG figures, to say nothing of his substantial ownership interest) he has nothing to do with the company’s decision to sell early access to posts of the Truth Social platform.
There are other complexities. Led by Trump appointees, the Justice Department, the FBI, and the SEC are not going to investigate the president. The statute of limitations on criminal and civil suits might allow for legal action by the next administration (if it is a Democratic administration). But let’s set the immunity hurdle aside; as I’ve said a number of times (and I’m hardly alone in this), the way Trump has governed in the second term leaves scant doubt that, before leaving office, he is going to mass-pardon administration officials and associates who’ve courted legal jeopardy, including himself. As Coates details, pardons would not bar civil lawsuits or criminal prosecutions under state law, but legal uncertainties would abound.
That should all be beside the point.
As the Democratic lawfare against Trump demonstrated to a fare-thee-well, the judicial system is ill-equipped to address abuses of executive power. That’s common sense. When a president abuses power, it is not a private act fit for litigation. The victim is the nation — and executive power is such that the damage can be catastrophic. The imperative, therefore, is to strip away or nullify the power. Courts have no capacity to do that. And let’s say, years after the fact, that there could be some supple theory that — after dodging presumptions against applying laws to the president, immunity, pardons, and tradition — could impose personal legal consequences on a wayward president; that would still be irrelevant to the nation’s well-being in the here and now, when it matters.
Not yet two years into second term, Donald Trump has made himself more than $2 billion from monetizing the power and prestige of the presidency. He has demolished the American republican norm against cashing in on public office while holding it. And quite apart from whether he’s technically guilty of insider trading, the most insidious aspect of this latest scheme is the incentive it gives him to be outrageous. The more unhinged the posts, the more unpredictable the actions, the greater the potential to send prices climbing or crashing — and the greater the attractiveness of early access fees to traders who hope to cash in. It is a neon-flashing conflict of interest guaranteed to produce unstable governance.
And only Congress can do anything about it.