The Japan Times - Fishy trades before major news spark insider trading allegations

Democratic lawmakers, traders and industry watchdogs are raising alarms, saying such seemingly prescient bets are forming a pattern that suggests people are profiting from prior knowledge of White House decision-making.

"This is the kind of thing that makes people wonder if their government is acting in their best interest or trying to enrich certain individuals," said Jordan Libowitz, vice president of the ethics watchdog Crew.

In the latest case, trading in oil and S&P 500 futures contracts, in which an investor promises to buy or sell an asset at a fixed price at a later date, saw an unusual spike in trading early Monday.

Just 15 minutes later, Trump posted on his Truth Social network that talks with Iran were "very productive" -- a dramatic shift in tone after Trump warned Saturday that he had given Tehran 48 hours to reopen the Strait of Hormuz or face strikes on its energy grid.

The news sent oil prices plunging and stocks surging. People who placed the flurry of futures trades beforehand likely pocketed tens of millions of dollars, according to calculations by a market operator for AFP.

"Seeing large transactions like these before an announcement is a little suspicious," said Michael Lynch, an oil analyst at Strategic Energy & Economic Research. "It's unusual. You don't see this at this level in the oil market."

Monday's incident came a few weeks after six accounts on the betting site Polymarket made $1.2 million on bets that the United States would attack Iran on February 28, the day the war began.

According to an analysis by the analytics firm Bubblemaps, the bets were placed just hours before the bombings were reported.

And in early January, an individual pocketed more than $400,000 after betting on Polymarket that Venezuelan leader Nicolas Maduro would be ousted just hours before he was seized in a raid by US forces.

So far, there is no evidence to suggest that Trump or White House officials are linked in any way to these transactions.

"Any insinuation, without evidence, that a member of the government engaged in these acts is baseless and irresponsible," a White House spokesperson told several media outlets.

Still, critics of the administration see the trades as evidence of corruption.

Democratic Senator Chris Murphy posted on X: "Who was it? Trump? A member of his family? Someone in the White House? This is unbelievable corruption."

- 'No secret' -

The transactions have provided further ammunition for Democratic lawmakers and other critics who have accused Trump of conflicts of interest since the beginning of his second term last year.

Members of his family have made hundreds of millions of dollars in profits from cryptocurrencies, a market he has sought to deregulate.

The Chicago Mercantile Exchange, the world's largest market for trading derivative financial products, and the US Securities and Exchange Commission both declined to comment.

The Commodity Futures Trading Commission, which regulates derivatives markets, did not respond to several requests for comment.

On Thursday, a group of congressional Democrats introduced a bill that that would ban bets on elections, government actions, war and sports, CNBC reported.

Even some members of Trump's own party are seeking clarity on the trades.

"Someone needs to be publicly shamed for insider trading," said Republican Jeremy Munson, a candidate for the Minnesota Senate.

Mark Neuman, chief investment officer at Hero Asset Management, said it should be possible to discover the identities of those who placed the trades in question, and suggested the problem resulted more from lax oversight.

"When you make a transaction, there are details you have to provide" to the exchanges, "so there's no secret," Neuman said. "If there were stricter regulators in this country, we would find out" their identities.

"But it seems this administration favors less regulation," he said. "It's really sad, because the integrity of the markets is being torn to shreds."

M.Saito--JT