Is Trump Media’s Early-Access Feed Lawful?

Prof. Jack Goldsmith (Harvard Law) interviews Prof. John Coates (Harvard Law, former SEC general counsel). An excerpt:

Jack Goldsmith: President Trump regularly breaks news on his social media platform, Truth Social, where he posts market-moving presidential and White House announcements. The company now sells faster access to those posts for up to $100,000 a month. The advantage is apparently just 50 milliseconds, but that is enough to benefit traders.

To date, the early access has attracted more than a dozen subscribers. The arrangement effectively lets Trump profit off the presidency. Can this arrangement possibly be lawful? …

John Coates: … If you pay roughly $1.2 million a year to Trump Media, you get Trump’s Truth Social postings ever so slightly before they hit the public website. And Truth Social, of course, is Trump’s primary way to talk to the public.

In fairness, just one little nuance: it’s not Trump himself selling this access. It’s Trump Media. He did create that company. He only owns 41% of it. He’s not an officer of it. His stock is in a trust. His son is the trustee. He’s the sole beneficiary of the trust, and Trump can revoke the trust at any time. So I say all that just to be fair. But nevertheless, yes, I think you captured it correctly.

[Goldsmith:] So that’s good. But given that financial arrangement, is it fair to say that he is an ultimate beneficiary, at least in part, of this $100,000-a-month fee?

[Coates:] Yes. He’s directly profiting through his indirect ownership of Trump Media.

[Goldsmith:] John, outside the Truth Social context, isn’t selling low-latency access to already public information a standard business practice done by Bloomberg, Dow Jones, and the like?

Yes. I mean, even 50 milliseconds of a timing advantage is commonly paid for by third parties in the markets. The easiest example is arbitrageurs who are trading in two different markets and see the same asset being traded at slightly different prices. They buy in one, they sell in the other, and the faster they can exploit that gap, hopefully before anybody else does, the more likely they’re going to profit from that. And so they’ll pay millions to co-locate—to physically locate their computer systems very close to the source of whatever information they’re trading on.

But here’s the difference between that, which is pretty common, and what’s going on here. In those situations, the public information is being both produced and sold by a for-profit company, typically either a news source or a market like the New York Stock Exchange. And selling access is something they’re entitled to do. They’re selling the right to get their information in a way that they can profit from the most.

Here, the information that’s being sold certainly doesn’t belong to Trump Media. And I don’t think it credibly belongs to Trump himself either. He’s functioning in a public role when he makes many of these announcements. I suppose you might divide his posts up into those that are just him ranting about his personal things—and maybe that has an effect on the market, and maybe you treat those differently—but when he announces over his posts that we’re going to war, he’s not announcing that as a private citizen or as a businessman. He’s announcing it as president. And that means that someone who’s profiting on that is indirectly paying him to trade in the market ahead of the public, on information that belongs to the public, on a differential basis….

The whole thing is much worth reading.