Former SEC Chair Jay Clayton stated that regulators will investigate unusual trading activity in S&P 500 and oil futures that occurred minutes before President Donald Trump's social media post about U.S.-Iran negotiations, which moved markets.
Trading Spike Prior to Presidential Announcement
Early Monday, around 6:50 a.m. New York time, trading volume surged in S&P 500 and oil futures. This activity preceded by approximately 15 minutes a social media post from President Trump indicating that the U.S. and Iran had held talks and that planned strikes on Iranian infrastructure would be halted. The post subsequently lifted equity markets and lowered oil prices.
Clayton's Role and Regulatory Intentions
Clayton, who served as SEC chair and is now U.S. Attorney for the Southern District of New York, emphasized that regulators would scrutinize the pre-announcement trades. "Any move like that in advance of any announcement, the regulators are going to look at," he said on CNBC's "Squawk Box." He added that authorities would reconstruct all transactions and identify participants across markets. The SEC declined to comment on the specific incident.
Surveillance Disparities Across Markets
Clayton noted that regulatory oversight is more robust in cash equities markets, where detailed data enables tracking of securities trades. "Our best surveillance is in the cash equities markets — like, we can track it," he stated. In contrast, surveillance in futures and commodities markets is more complex and less comprehensive, posing challenges for real-time monitoring.
Call for Congressional Action
Clayton expressed concern that current laws on trading based on non-public information are unclear. "The law is not as clear as it should be...There are a lot of people who say this is okay. I don't feel like it's okay," he said. He urged Congress to clarify regulations uniformly across all markets to address potential loopholes and enhance market integrity.