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by sebasv_ 426 days ago
What would determine whether the SEC will investigate for insider trading? I would expect them to be shielded from executive pressure.
9 comments

Who would be doing the shielding? The current US government has been operating under the assumption of an incredibly expansive executive power, even over "independent" agencies.

I'm not a legal expert at all but so far the most useful mental model has been to assume absolutely no one is shielded from executive power (including organizations and people entirely outside the federal government) unless the courts have delivered a final ruling on it.

How would a final court ruling shield someone from executive power? The court relies on the executive to enforce its decisions. They can find a person in contempt, and order fines or jail time until that person complies, but I believe the orders are then enforced by U.S. Marshals, who are executive appointees.

This is a serious question. What have I missed?

If the Marshalls neglect their oath to the Constitution (whether ordered to by superiors or not) then the court can deputize others to carry out court orders. IIUC correctly that's usually the police.
I cannot overstate this enough: The police cannot be counted on to protect citizens against governmental overreach.
I think there's no hard power stopping them but in general they've been reluctant to openly defy courts (they have defied lower courts some while claiming they haven't). I think at least adhering to some pretense of American democracy has so far been important to this administration and if they abandon that pretense carelessly they run a real risk of losing necessary support (popular support, Congressional support, but also support of executive branch institutions).

Also, it's not that I think they won't defy courts but they'll be very careful in doing it (well, at least as careful as this administration can be) so it's still a reasonable base assumption that court orders protect you since while it's not the ironclad protection it was it still gives you some protection for now. Though that "for now" is obviously rather ominous.

Do you still think so, after seeing them stonewall the courts in the Kilmar Abrego García case? To me it appears they a brazenly flouting the law.
> I would expect them to be shielded from executive pressure.

In the past month the SEC has stopped most enforcement actions involving crypto.

The president nominates the SEC chair, and can fire him.

This explains how, written just before Trump assumed power:

While he can't force Gensler to step down as a commissioner at the U.S. Securities and Exchange Commission, he can name a new interim SEC chair as soon as he's inaugurated on Jan. 20. He can also nominate a new commissioner to the Senate, which has to confirm the pick.

https://www.coindesk.com/policy/2024/11/07/heres-how-quickly...

And Gensler resigned as Chair as soon as Jan 20th:

https://www.sec.gov/newsroom/press-releases/2025-29

When the criminals get root access...
"I would expect them to be shielded from executive pressure."

Such an expectation was rational prior to 2025-01-20. Since then it's been completely counterfactual.

Questionable if there is anything to investigate, definitionally you can't inside trade an index fund.
If you’re POTUS or closely related to POTUS with access to sweeping information about erratic tariff policies that actual do shift entire markets index funds index against, why couldn’t you?

In general I think you’re correct because the “inside” information is typically not as broad or powerful. But I don’t think we live in general times. If POTUS gave me personally a heads up about such adjustments on tariffs, after watching indexes tumble after announcing them, and knowing the opposite direction, I would dump almost everything I had access to in such stocks largely effected by reevaluation from tariffs.

Knowing major policy shifts before they happen from one of the powerful governments in the world is useful information, especially when the policies are being set by a handful of people who can limit access to knowledge escaping even more than regularly so markets don’t adjust from larger sets of insider information.

Now is it really considered “insider” trading in this case? Probably not, and this administration can get away with anything it seems.

That's the whole point. It CANNOT have been someone inside all 500 companies. It wouldn't make much sense because those companies did not do anything at the time. It was president Trump's tweet that moved the market. So it can only have been someone that new of Trump's announcement hours before he made that announcement.
Why would you expect that?
In this administration they will be fired for cases Trump doesnt like. Who would protect their independence, Congress? The house members will not oppose any trump policy unless the US is in a depression due to his action
At this point, it's not clear that they would oppose him dropping a nuclear bomb on Ohio.
Well, if there was a hurricane headed to Toledo, it could be justified.[0]

All depends on if it's in the storm path drawn by the Presidential Sharpie.

[0] First Trump threatened to nuke hurricanes. Now he’s waging war on weather forecasters

https://www.theguardian.com/commentisfree/2025/mar/04/trump-...

SEC is a federal agency so falls under the Executive which is controlled by Trump. Trump will fire any SEC employee who investigates the "wrong" people and install a loyalist in their place.
This is the truth, they have been recently divesting of anyone who wants to prosecute for white collar crime. The next four years will see at least one trillionaire because he/she will be able to game the system without any barriers because the sheriff is also the criminal.