Why a 50-millisecond edge in the president’s posts could trigger insider trading rules.
Prof. Jack Goldsmith (Harvard Law) interviews Prof. John Coates (Harvard Law, former SEC general counsel). An excerpt:
Goldsmith: The president, Trump, regularly reveals news first on his social media platform, Truth Social, where he posts market-moving presidential and White House announcements. The company now offers quicker access to those posts for as much as $100,000 per month. The apparent edge is merely 50 milliseconds, yet that brief advantage can benefit traders.
So far, early access has drawn more than a dozen subscribers. The arrangement effectively lets Trump benefit from the presidency. Is such an arrangement even lawful? …
Coates: … If you shell out around $1.2 million a year to Trump Media, you obtain Trump’s Truth Social postings just a hair before they appear on the public site. And Truth Social, of course, serves as Trump’s primary channel to address the public.
To be precise, just one nuance: it isn’t Trump personally selling this access. It’s Trump Media. He did establish that company. He only owns 41% of it. He isn’t an officer of it. His stock sits in a trust. His son is the trustee. He’s the sole beneficiary of the trust, and Trump retains the power to revoke the trust at any moment. I mention all of this to be fair. But still, yes, I think you’ve described the situation accurately.
[Goldsmith:] So that’s helpful. But given this financial arrangement, is it fair to say that he is an ultimate beneficiary, at least in part, of this $100,000-a-month fee?
[Coates:] Yes. He stands to profit directly through his indirect ownership of Trump Media.
[Goldsmith:] John, outside the Truth Social setting, isn’t selling low-latency access to already public information a standard business practice employed by firms like Bloomberg, Dow Jones, and the like?
Yes. I mean, even a 50-millisecond timing edge is commonly monetized by third parties in financial markets. A straightforward example involves arbitrageurs operating across two markets, where the same asset trades at slightly different prices. They buy in one venue, sell in the other, and the speed at which they can exploit that gap—ideally before others—greatly increases their profits. As a result, they are willing to pay millions for co-location—physically situating their computer systems close to the source of the information they trade on.
But here’s the distinction between that commonplace scenario and what’s happening in this case. In those circumstances, the public information is produced and sold by a profit-driven entity, typically either a news outlet or a market operator such as the New York Stock Exchange. And selling access is within their rights. They are selling the ability to receive information in a way that maximizes their own profits.
The whole thing is worth reading.
