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During the first three months of 2018, President Trump made good on a core campaign promise by announcing a series of import tariffs to protect American industries from what he described as the unfair trade practices of other countries. In January, he imposed tariffs on washing machines and solar panels aimed at reducing cheap imports from China and South Korea. A few weeks later, on 1 March, he announced a 10 percent tariff on aluminum imports and a 25 percent tariff on steel. The latter had the unintended consequence of sparking a stock sell-off on Wall Street, reflecting investors' fears of a looming international trade war and inflation. Predictably, the stock prices of American steel producers rose in response to the tariff announcement. Those of auto makers and other businesses heavily dependent on foreign steel took a hit. One of the latter was the crane manufacturer Manitowoc, whose share price tumbled from $29.72 the day before the announcement to $26.93 the day after. That surprised no one, but something curious did happen over the few weeks just prior to Trump's speech. According to a 2 March report by progressive news site Think Progress, billionaire investor Carl Icahn, a former economic regulatory adviser to Trump, sold off $31.3 million worth of Manitowoc stock: Without ever mentioning the phrase insider trading, the article's author, Judd Legum, implied that such may have taken place, highlighting what he termed the impeccable timing of Icahn's sell-off. Other sources, including the New York Times, Bloomberg, and Washington Post, noted the timing as well. Bloomberg reported: Though Trump and Icahn's relationship stretches back many years and they're sometimes described as longtime friends (Think Progress called Icahn a confidant of Trump's), the Washington Post has characterized their association as highly competitive and centered more around business than friendship. I’ve known him over the years, as an acquaintance. I like him, the Post quoted Icahn as saying. But I don’t see him all that much. I’m pretty much a workaholic. Though Icahn served as an special adviser to the president on regulatory reform during the first half of 2017, he resigned the informal, unpaid position when allegations of conflicts of interest surfaced (Icahn denied the allegations). In a 1 March television interview, Icahn said he hadn't had much interaction with Trump in the last four or five months. Even so, Think Progress ran a follow-up article quoting Duke University law professor James D. Cox, an expert on insider trading, to the effect that the timing of Icahn's stock sell-off was 'awfully suspicious' and 'unquestionably' warrants a federal investigation: NPR reported on 3 March that a White House spokesman had dismissed allegations that insider information was exchanged on the grounds that Trump has long said both publicly and privately that he wanted to impose tariffs. On 5 March, the nonpartisan watchdog group Project On Government Oversight (POGO) released a letter calling on the Securities Exchange Commission (SEC) to investigate Icahn for possible insider trading. On 7 March, Icahn categorically denied receiving advance notice of the tariff announcement in a terse statement posted on his web site (emphasis in the original): A 23 February analysis of Icahn's Manitowoc sell-off by research analyst Matt Hogan characterized the company's stock as overvalued and underperforming, and the company's projected growth in comparison to its peer group as mediocre. Manitowoc's share prices had been falling steadily since 26 January. Although there is precedent for pursuing insider trading charges against government officials and others who misappropriate nonpublic government information for profit, academic experts on insider trading told us that the evidentiary bar for proving that an illicit exchange of privileged information took place is quite high, making prosecution in a case like this, given what we know, unlikely. Moreover, the information in question pertained to a policy change with broad potential effects on entire industries. Insider trading charges more typically revolve around the misappropriation of so-called material information specific to particular companies and products. As of this writing, the SEC has not publicly responded to POGO's demand for an investigation, and declined our invitation to comment on the matter.
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