• Senior Trump officials reportedly met with the board of the Hoover Institution, a conservative think tank, and gave them advance, stark warnings about COVID-19
  • The information was passed around private investment firms. By the end of the day, U.S. stocks had fallen almost 300 points, netting profits for Republican insiders
  • Investors involved maintain they were already shorting the market

It's well known Donald Trump downplayed the severity of the pandemic publicly: he’s said as much on tape.

Previously unknown, however, is that top Trump officials met with Republican donors and told them the economic impact would be severe while still telling the public not to worry. This allowed them to sell off stocks and make bets that turned the lethal pandemic into personal enrichment.

The group in question is the Hoover Institution, a conservative think tank whose leadership includes Rupert Murdoch and Condoleezza Rice. The New York Times reports that senior members of Donald Trump’s economic team met with the board of the Hoover Institution on Feb. 24, the same day Trump was still telling his rank and file supporters that everything was fine.

The tone of the meeting, led by senior economic adviser Tomas Philipson, included uncertainty regarding whether COVID-19 could be contained. Hoover met the following day with Larry Kudlow, director of the National Economic Council, who gave an equally uncertain prognosis.

The New York Stock Exchange.
The New York Stock Exchange. AFP / Johannes EISELE

The Hoover Institution took that uncertainty to heart, drafting a memo advising partners that the U.S. was about to be hit by a devastating virus. It was distributed quickly among private investment firms, who made their already conservative positions even more extreme. One investor told the Times his reaction was to “short everything,” placing bets the economy would crash.

By the end of the day, the U.S. stock market had fallen almost 300 points. The message was written by William Callanan, who says it seems to have been altered as it was passed around like a game of telephone. He told the Times that the final iteration they showed him was “materially different” from what he had written.

Traders who participated in the event say that the memo only strengthened suspicions that already existed, not significantly affecting their actions. Some initially denied even receiving it. An initial recipient of the information was David Tepper, founder of the hedge fund Appaloosa Management and owner of the Carolina Panthers. He told the Times if he did receive the memo it wasn’t memorable.

Either way, there’s very little chance that anyone involved is criminally liable. Both the government briefing and the circulated memo were based on opinions and public information, meaning that it would be very difficult to argue they violate laws around insider trading.