The Trump administration ordered federal financial regulators to retract a report flagging suspicious oil trades.
Only 15 minutes before President Trump decided not to strike Iranian power plants on March 23, a few traders sank billions of dollars into predicting that the S&P 500 would go up and oil prices would fall, making a hefty profit, Bloomberg reports. The traders reportedly used a two-minute window at 6:49 a.m. that day to make the massive deals in futures markets.
“The fact that this trading preceded a headline driven sell-off means that either someone got very lucky or knew something,” Tim Skirrow, head of derivatives at Energy Aspects, said to Bloomberg.
As is standard practice, analysts with the Commodity Futures Trading Commission, the federal agency responsible for regulating derivatives markets, flagged these trades and referred them to the commission’s Division of Enforcement, to decide whether a further investigation into insider trading was necessary.
But then Mel Gunewardena, an adviser to the Trump-appointed chair of the CFTC, Michael Selig, told a supervisor on the commission’s market oversight team to retract the referral, according to unnamed sources cited by Bloomberg.
This kind of move was unprecedented. The oversight team reportedly didn’t know what to do, as such a retraction had rarely, if ever, been ordered before. Career agency employees on the oversight team gather data and write reports, and, as a matter of procedure and expertise, send them to the enforcement team, which has expert attorneys on the subject, to make the legal decisions.
“In every previous administration I’m familiar with, that would not just have been unusual—but never done,” Aitan Goelman, who worked as the agency’s director of enforcement from 2014 to 2017, told Bloomberg when asked a general question about Gunewardena’s kind of move. “It makes it harder for the staff, if they know that any moment the rug can get pulled out from under them.”
Sources told Bloomberg that Gunewardena, a former Goldman Sachs and State Streets Corp. executive who worked for the CFTC during Trump’s first term, was trying to scrap the referral and take over gathering the data on the trades himself. Weeks before, he was hired by the agency as head of the Office of International Affairs and senior markets adviser to the chairperson.
Bloomberg reached out to the CFTC, which declined to comment, as well as Gunewardena, who did not respond to the outlet. The Trump administration is trying to make the agency the main oversight body for prediction markets such as Kalshi and Polymarket, and this incident won’t help the White House beat accusations of insider trading, with suspicious events becoming all too common since the Iran war began in February.