“It's a good time to buy stocks”: Can Trump be accused of insider trading on the stock market?

"It's a good time to buy." If this phrase comes from the local greengrocer, it doesn't have much relevance. But things change if Donald Trump posts it on his social media . The US president did so just hours before postponing the implementation of his controversial tariff-for-all policy, announced with great fanfare on "Liberation Day" and which turned global stock markets red for several sessions. However, after confirming the tariff postponement, a rebound came and stocks rallied. If anyone followed the president's advice and bought shares at the bottom, they could have made substantial profits. The controversy—yet another one—was served: some accused Trump of using insider information, a practice prosecuted by regulators and which can be a crime in Spain.

The crime of insider trading is complex to prove. According to the Criminal Code, this type of crime occurs in three cases: when the tip-off is used to buy or sell shares and the benefit or loss to third parties exceeds half a million euros; when the transaction is made with financial instruments worth more than two million euros; and when it causes a serious impact on the integrity of the market.

But what is inside information? The definition is provided by the Securities Market Law and reiterated by the Supreme Court, as Enrique Remón, litigation partner at CMS Albiñana & Suárez de Lezo, points out: it must not be public, it must be directly related to a specific financial instrument, and it must be capable of significantly influencing the market when published, causing a security to rise or fall by a significant percentage. "A tweet saying it's a good time to buy, published by the US president for the whole world, is not a secret. The law is aimed more at other transactions, mergers, or a takeover bid," the expert clarifies.

He agrees with Ignacio Martínez-Arrieta, a criminal lawyer at the Gómez de Liaño & Márquez de Prado law firm. “If he were in Spain, it's questionable whether he would have committed a crime. Trump hasn't taken action on the value of specific shares, but rather on the delay in implementing tariffs, which isn't information about a specific company,” he points out. “A typical case is that of a manager who learns of his company's losses before the annual accounts are published and recommends that his family members sell the shares,” explains José María de Pablo, a criminal partner at the Mas y Calvet law firm.

Furthermore, there are few convictions. “Criminal case law indicates that convictions are based more on circumstantial evidence than on evidence, and the link to the person carrying out the transaction must be proven. If someone has access to information due to their banking profession, for example, banks often restrict employees' relatives from carrying out certain transactions, so they tend to share them with third parties,” explains Berta Viqueira, director of the criminal law and compliance department at Ceca Magán. But ambition is often the weak link. “If someone knows about a transaction and their brother or uncle buys a large number of shares, that will be a huge blow to the market,” she warns.

Talking too much

When the beneficiary talks too much and boasts about a "hit" within their circle, complaints can arise. "Unless the recipient of the information speaks out, it's difficult to prove. Recommendations are verbal and leave no trace," says José María de Pablo. Added to this are other complexities. "There's no clear understanding of what it means to cause a serious impact on the integrity of the market, and you have to look at the specific facts," notes Ignacio Martínez-Arrieta.

It must be proven that there was an agreement between those under investigation. "Privileged information is known by one person and used by third parties to take advantage of it. The difficult part is proving collusion between those who know and those who buy or sell assets before the transaction is made public," Enrique Remón points out. In addition to family ties or friendships, there are cases that raise suspicions: an inexperienced person who suddenly invests €100,000 in a listed company the day before a takeover bid.

Companies can also be held criminally liable, experts confirm, although it is not automatic or direct when an employee has committed a crime. Banks, insurance companies, investment firms, or law firms that advise on high-profile transactions are often more exposed to an employee engaging in insider trading. How do they manage this risk? By designing solid crime prevention plans. These typically include confidentiality clauses, as well as the obligation to disclose investments made by immediate family members or to provide periodic information on their assets. "Having a good crime prevention manual with robust measures in companies that are more sensitive to potential cases of insider trading can prevent the legal entity from being convicted if one of its employees or directors has committed this crime," explains Berta Viqueira. However, the company must benefit from that action to be held liable.

Therefore, if Donald Trump had recommended buying shares on the Spanish stock market a few hours before reversing his tariff policy, as he did in his own country, he would have emerged unscathed. But markets tend not to forget the consequences of these economic shocks and ups and downs, and they have penalized him in terms of investor confidence after the heart-stopping days experienced by stock markets around the world.