Can the president be investigated by the SEC for stock manipulation? This year the SEC investigated Elon Musk for possible stock manipulation through social media posts, and he was ordered to stop making tweets related to his business. Today, Trump made a post that led to a major drop in the stock market. This wasn't the only time he made a post that impacted the market. Is it possible that the SEC tell the president to stop tweeting and investigate for stock market manipulation?

  • 1
    @closevoters voting to leave open because this is specifically about what can be done to the president, who is clearly a political figure. – Stormblessed Aug 24 at 14:20
  • Preventing a federal agency from “investigating” something or someone without restricting their actions otherwise would be nigh impossible. – jmoreno Aug 24 at 20:57

If you would make it illegal for celebrities to make statements which could affect the stock market in any way, you would make Twitter illegal in the first place. Especially for politicians, because everything politicians say or do can indirectly affect the stock market. Whenever a politician publicly suggests that some industry should be regulated, taxed or subsidized more or less than it was before, the stocks of the affected companies will react to that news accordingly. But making public statements about political intentions is important for a democracy, because it is the only way to have a public discussion about policy or for voters to make informed decisions about who to support.

The reason why the SEC complained about Elon Musk's use of Twitter was because he made statements about companies he managed or was a shareholder of which were allegedly fraudulent.

How would this apply to the US President?

  1. The SEC would only have a right to complain about manipulating stocks in a way which financially benefits the US President himself. They can't blame the US President for any other stock manipulation. This is, by the way, one reason why many US government officials put their private investments into a blind trust while they hold office. That way they avoid allegations that their political statements or decisions benefit their own investments. However, Donald Trump decided to not do this.
  2. There was an important court decision in 1867, Mississippi v. Johnson, where a court decided that the US Presidents are not within the reach of judicial direction when they exercise their presidential powers. Is making political statements via Twitter a part of the exercise of power of the US President? In the 21st century, probably. But I am not aware of any actual court decisions in this regard.
  3. It is questionable if a federal commission is able to indict a sitting president for any crime as long as they are in office, including for misdemeanors they committed before they took office. The conclusion of Robert Mueller's report was that this is the sole prerogative of Congress.
  • What does judicial direction mean? Maybe discretion? or purview? – K Dog Aug 24 at 12:11
  • @KDog "judical direction" is the wording from the source. What it means is that the President has personal immunity from the judicial process when exercising presidential powers. So no court can punish the President for a political action (this does of course not affect the ability of courts to invalidate the action itself if they find it to be against the law). – Philipp Aug 24 at 12:16
  • Must be a term of legal art. Also changed Misdemeanor to Crime because the DOJ policy covers both felony and misdemeanor crimes – K Dog Aug 24 at 12:20
  • 1
    @Philipp I think the statement "If you would make it illegal for celebrities to make statements which could affect the stock market in any way, you would make Twitter illegal in the first place." goes a bit far... Not only celebrities tweet + I think that whoever tweets, [or makes any public statement, SNS or not] the point is if the person does that for manipulation or not. Sweden had a case [sorry, poor English in the link] about (medical) students buying + then recommending [low liquidity] listed stocks in blogs to make money, see svenskeaktier.dk/tag/manipulating-share-prices – Tuomo Aug 24 at 13:52
  • 1
    @IllusiveBrian sorry if my message was badly formulated. What I tried to say was that the no matter who you are, while you can often tweet things that affect the stock market, if you time your tweets to match with your trading to try to manipulate the market and gain from that, you could at least in many countries face charges. [In a place like e.g. NYSE this may be more theoretical due to the high trading volumes. ] [The presidential immunity is of course a separate thing to consider] – Tuomo Aug 26 at 3:38

Short answer, no, nor any other person for what you claimed.

Manipulation is defined as:

Manipulation is the act of artificially inflating or deflating the price of a security or otherwise influencing the behavior of the market for personal gain. Manipulation is illegal in most cases, but it can be difficult for regulators and other authorities to detect. Manipulation is also difficult for the manipulator as the size and number of participants in a market increases. It is much easier to manipulate the share price of smaller companies, such as penny stocks because analysts and other market participants do not watch them as closely as the medium and large-cap firms. Manipulation is variously called price manipulation, stock manipulation, and market manipulation.

The tweet you mentioned I believe is embedded here where he mocks Seth Moulton. unless it was the tirade on China or the Fed. In any event, none of these rise to the level of artificial stock manipulation for personal gain.

  • 3
    The question seems to be about the theoretical possibility rather than a current specific incident. Given the Musk incident in the question it is obvious that a tweet can be considered grounds for such an investigation. – Jontia Aug 24 at 11:42
  • @Jonita, sorry didn't read it that way. Seemed to be very on point for a tweet mentioned and the corresponding result to the stock market. – K Dog Aug 24 at 12:02

Your Answer

