Investing the Day Before Good News... Just 'Pretending' to Prevent Conflicts of Interest?

Warren Harding, the 29th President of the United States in the early 20th century, consistently ranks at the bottom of presidential popularity polls. He is evaluated as a symbol of corruption and incompetence. Although there is no evidence that he personally pocketed illicit funds, he appointed his close associates, particularly his hometown friends known as the "Ohio Gang," creating a hotbed of corruption. The representative event is the "Teapot Dome Scandal." Albert Fall, who was the Secretary of the Interior, illegally leased Navy petroleum reserves (Teapot Dome) to private oil companies and received massive bribes. This led to an unprecedented situation where a sitting cabinet secretary was arrested, and it is considered one of the most notorious corruption scandals in U.S. history. President Harding was regarded both then and thereafter as a prime example of a conflict of interest, failing to separate private interests from public duties.

However, a conflict of interest issue involving a president that surpasses this has emerged in 21st-century America. This is the controversy over President Trump's "bulk purchase of stocks right before the 2025 tariff deferral measure." This was disclosed by Trump himself in a 927-page financial disclosure report submitted to the U.S. Office of Government Ethics. According to the records, on April 8, 2025—when the stock market was plunging due to the announcement of the so-called "Liberation Day" tariff bombshell—Trump's investment accounts intensively purchased as many as 327 transactions, worth $12.8 million, including mega-cap tech stocks such as Apple, Nvidia, and Microsoft. And the very next day, on April 9, President Trump unexpectedly announced a "90-day tariff deferral," triggering a historic surge in which the S&P 500 JISOO skyrocketed by 9.52% in a single day. Simply put, he bought a large volume of stocks that were certain to benefit just one day before announcing a policy that would be highly favorable to the stock market.

Naturally, American society was thrown into an uproar. Democrats, including Senator Adam Schiff, attacked, saying, "The President caused the stock market to crash with a single word, swept up stocks at the bottom, and then pocketed massive profits the next day by changing his stance." They poured out harsh criticism, calling it market manipulation (Distorted) and a complete bankruptcy of public ethics. In particular, they demanded an official explanation from the White House and a hearing, claiming that violating the 45-day disclosure requirement and revealing it a year later was evidence of an attempt to cover up criminal acts. In response, President Trump's side hit back, calling it a "witch hunt." His second son, ERIC Trump, drew a line on social media, saying, "The Trump family and family companies do not select, direct, approve, or exert influence over specific investment items." He stated, "We have no prior knowledge of the transactions, and an independent third-party asset management firm makes the investment decisions". White House spokesperson Anna Kelly also emphasized, "The Trump family has never engaged in, and will never engage in, any conflict of interest activities," adding, "All policy decisions of the administration are for the benefit of the American people". The Republican Party is also launching a counteroffensive, bringing up past stock trading allegations of other politicians, such as former Democratic House Speaker Nancy Pelosi, and asking, "Why apply a double standard only to Trump?"

Regarding the conflict of interest issues of high-ranking public officials, including the president, the United States has developed customs and practices to prevent them. This is the "Blind Trust." It is a system where a president, upon taking office, delegates full authority over all of their assets, including stocks, real estate, and corporate stakes, to an independent trustee, such as a financial institution, to sell or manage them. The president must have absolutely no knowledge of where those assets are being invested or how the businesses are being run during their term in office. In the early 1970s, when trust in the ethics of high-ranking officials, including the U.S. president, hit rock bottom due to the "Watergate scandal," the U.S. Congress finally created a bipartisan bill: the "Ethics in Government Act of 1978." This legislation codified the customary practice of the "Blind Trust," establishing it as an official system. Consequently, almost all modern presidents, from Lyndon Johnson to Barack Obama, placed their entire wealth into a blind trust or converted their financial assets into diversified forms, such as index funds and government bonds, to eliminate any potential conflicts of interest. However, the one who shattered this tradition and practice is President Trump.

He took advantage of the fact that setting up a blind trust under the Ethics in Government Act of 1978 is not a mandatory provision. The law merely stipulates that "if a high-ranking public official establishes a blind trust to avoid conflicts of interest, it must meet strict standards certified by the Office of Government Ethics to be recognized as legally effective." President Trump has never approached the Office of Government Ethics to request, "Please certify my assets as a legal blind trust." Since enrollment is not a legal obligation, he chose not to use the system at all. Instead, he privately created a general trust and handed over management rights to his children. Naturally, because this does not meet the standards of the Office of Government Ethics, it is not a legally "qualified blind trust." The Office of Government Ethics also officially announced at the time that "Trump's measures are far from a legal blind trust." If he had established a legally compliant blind trust, the current controversy would not have occurred, but under a "do-as-I-please trust," similar issues are highly likely to arise at any time.

Then, why don't other high-ranking public officials also skip the blind trust and freely pursue private interests like Trump? It is because of the "Conflict of Interest Prevention Act," which even carries criminal penalties. This law prohibits U.S. federal public officials from participating in government work that affects their own financial interests or those of their families. Therefore, cabinet secretaries or White House aides could go to prison under this law if they handle related duties while keeping their assets as they are. Thus, they must completely separate their assets by enrolling in a strict "qualified blind trust." However, the president and vice president are explicitly excluded from the scope of this law. This is based on the logic that the president's governing authority granted by the Constitution cannot be restricted by lower laws. It is, in effect, a form of immunity.

The "STOCK Act" (Stop Trading on Congressional Knowledge Act), enacted in 2012, does apply to the president. This law prohibits all high-ranking public officials from trading stocks using non-public, confidential information obtained in the course of their duties. However, to apply this law, it must be proven that President Trump "directly" used the information to order the trades. As mentioned earlier, Trump's side claims that "the accounts are managed as 'fully discretionary accounts' operated by a third-party financial institution with independent authority". Therefore, the president's involvement in the stock trades would have to be uncovered through an investigation, which is highly unlikely to happen against a sitting president.

There is, however, a point where President Trump's side clearly violated federal law in this case. It is the "violation of disclosure obligations." Under the aforementioned Ethics in Government Act of 1978 and other regulations, high-ranking public officials, including the president, must submit a "periodic transaction report" within 45 days of making a stock transaction exceeding $1,000 to make it public. This is to allow citizens to monitor the connection between the president's policies and stock transactions in real time. President Trump quietly slipped this massive transaction, which occurred in April 2025, into his recent annual financial disclosure report, well past the legal deadline. However, the penalty for violating such a significant disclosure obligation is a mere $200 fine per violation. President Trump settled his legal liability by paying a small fine to the Office of Government Ethics.

President Trump exploited two loopholes: the gap in the ethics law that does not mandate a blind trust, and the exemption of the president himself from the conflict of interest criminal penalty law. Because of this, although highly suspicious circumstances of a conflict of interest have been revealed, he is expected to face no investigation or punishment during his term.

But is avoiding legal liability enough? For the past 40-odd years, U.S. presidents disposed of their assets or set up "blind trusts" not because "the law forced them to," but as a "voluntary custom to secure moral legitimacy as president and gain public trust." It was a sort of declaration that they would not seek private gain while performing their public presidential duties. President Trump threw away this moral obligation like a worn-out shoe. In addition to this "bulk stock purchase right before the tariff deferral measure" incident, it was also revealed that his family made nearly 2 trillion won from their cryptocurrency business. He is also drawing criticism for agreeing to receive a Boeing 747 passenger plane worth approximately 610 billion won as a gift from Qatar. It remains to be seen whether the American public will accept a president who grows his wealth while performing his duties as the "new normal," or if they will ultimately explode in anger and create a stricter prevention system.

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