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Speaker 1: A group of Democratic lawmakers are urging US regulators to

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Speaker 1: investigate whether billionaire investor Carl Icon used his role as

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Speaker 1: an advisor of the White House to gain unfair trading

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Speaker 1: advantages in the market for renewable fuel credits. Senator Elizabeth

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Speaker 1: Warren and other senators asked agencies including the Securities and

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Speaker 1: Exchange Commission and the Environmental Protection Agency to review whether

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Speaker 1: Icon engaged in insider trading on manipulated markets. Our guest

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Speaker 1: is Robert Hockett, professor at Cornell University Law Law School, Bob.

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Speaker 1: According to the letter at least Tuesday, the senators say,

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Speaker 1: there's troubling publicly available evidence that Icon, who's the majority

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Speaker 1: owner of CVR Energy, may have influenced policy decisions that

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Speaker 1: gave him a fifty million dollar quote impossible profit on

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Speaker 1: a massive bet unrenewable fuel credits. Can you explain that

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Speaker 1: and what the evidence is? Right? So the idea is

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Speaker 1: really simple, right. The thought is the claim is that, Okay, look,

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Speaker 1: Carla Cohn was able to buy certain financial instruments on

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Speaker 1: the cheap right, um, and uh that basically, well, a

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Speaker 1: better way to put this as he was able to

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Speaker 1: buy financial instudents on the chief that amounted to bets

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Speaker 1: on energy prices coming down. And they're claiming at the

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Speaker 1: same time that he had very good reason to know

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Speaker 1: that energy crisis would come down, because he had been

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Speaker 1: in the lighthouse advising the presidents to adopt certain policies

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Speaker 1: that would almost inevitably have that effect. So their claim

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Speaker 1: is that he was in he was situated in such

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Speaker 1: a way as he could have done that, he would

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Speaker 1: have been able to do that um and so in

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Speaker 1: consequence there should be an investigation to see whether he

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Speaker 1: did well. Is that illegal It would definitely be It

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Speaker 1: would definitely be illegal if he were to do it.

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Speaker 1: I mean, that would be classic insider trading. The question

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Speaker 1: is whether he actually did. So they're they're urging the

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Speaker 1: investigation because they think there's at least some sort of

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Speaker 1: evidence on the surface that that might have happened. And

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Speaker 1: they're saying that it's it's it's possible enough that at war,

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Speaker 1: it's investigation, And is is it classic insider trading? Is

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Speaker 1: there also manipulation of the markets involved? Well? I mean,

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Speaker 1: if he I mean, the only reason, the only way

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Speaker 1: you would call it manipulation would be if he attempted

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Speaker 1: to induce the president into adopting these policies specifically in

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Speaker 1: order to be able to trade on the price movements, right,

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Speaker 1: that would be manipulation if, on the other hand, he

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Speaker 1: thought it would be good policy, and it looked to

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Speaker 1: him as though the President was sort of buying what

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Speaker 1: he was saying and then decided to trade on it

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Speaker 1: because he thought, well, now there's been elevated likelihood that

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Speaker 1: the prices will come down. Then it would just be

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Speaker 1: classic incenter trading rather than manipulation. But it's it's basically

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Speaker 1: six and six or one half a dozen of the other,

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Speaker 1: same sort of thing. Well, but you know, isn't this

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Speaker 1: couldn't you see this just as an attack on the

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Speaker 1: president using, you know, a prominent person as an advisor

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Speaker 1: who knows a lot about the energy market. Is it

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Speaker 1: possible here that what we've really got is just the

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Speaker 1: Democrats going after someone because it's politically advantageous, but there's

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Speaker 1: really nothing untoward about him advice sing a president. Yes,

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Speaker 1: I mean it certainly could be that. Um And what

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Speaker 1: would decide whether it is or isn't that he is

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Speaker 1: really what kind of evidence there actually is out there

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Speaker 1: to the effect that that Mr Icon might have done this. Right,

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Speaker 1: if the evidence is really thin and it's just sort

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Speaker 1: of a speculative claim, um, right, If it's if it's

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Speaker 1: just a sort of a speculative claim saying, oh, you know,

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Speaker 1: he might have done this, then it could be viewed

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Speaker 1: as a kind of politically motivated attack, a kind of

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Speaker 1: a sort of impuning of the of the character of

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Speaker 1: one or the other of those gentlemen. But if, on

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Speaker 1: the other hand, there is something substantial there, then you

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Speaker 1: know there is reason to investigate. And I myself, I

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Speaker 1: just don't actually know how substantial or otherwise the evidence

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Speaker 1: that Senator Warren is going on is. I mean, she's

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Speaker 1: obviously a very conscientious public servant, doesn't tend to shoot

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Speaker 1: from the hips. She usually doesn't tend to go after

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Speaker 1: something unless she has a so called smoking gun or

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Speaker 1: at least some smoke. But again, I don't know the

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Speaker 1: particulars of the evidence that she has in this case

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Speaker 1: to sort of be able to weigh in one way

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Speaker 1: or the other on whether she has, you know, really

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Speaker 1: good solid evidence or whether she's just kind of a

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Speaker 1: blowing smoke. I just I just don't know. But Warren

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Speaker 1: and the and other senators have previously asked the White

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Speaker 1: House Council and other regulators to look into Icon's role

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Speaker 1: as a special advisor to President Donald Trump, saying that

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Speaker 1: there are conflicts of interest and nothing has happened. Are

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Speaker 1: these agencies more likely to do some investigating? Uh, it's

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Speaker 1: certainly not looking that way. Um. And now that Mr

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Speaker 1: Coomy has just been fired, I suppose that could be

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Speaker 1: viewed as another signal to the effect that, uh, uh,

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Speaker 1: investigating the administration itself is is not an immediately welcome move.

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Speaker 1: Let's say I'm the part of the agencies and involved. If,

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Speaker 1: on the other hands, you know, Republicans in Congress, in

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Speaker 1: addition to Democrats in Congress, began calling for things like this,

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Speaker 1: then of course the politics would change a bit. Uh.

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Speaker 1: And you could imagine the appropriate agencies, including the d

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Speaker 1: o J, taking a little bit more seriously. Uh, the

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Speaker 1: potential need to sort of inquire further. So if they

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Speaker 1: are going to inquire further, Bob, what would the process be.

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Speaker 1: How would this actually work as an investigation? Well, the

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Speaker 1: first thing they would do it would be to look

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Speaker 1: carefully at what trades Mr Akon himself had engaged in,

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Speaker 1: or what trades people close to him, right, his agents

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Speaker 1: or family members or friends or whatever pred e gage.

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Speaker 1: And and then if they noticed a pattern, right, if

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Speaker 1: it looked as though there was a sudden um uh

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Speaker 1: increase in sales or purchases of particular securities whose values

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Speaker 1: were correlated significantly with energy prices, then they might look

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Speaker 1: to the timing of Mr Icons it's the White House, right,

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Speaker 1: and say, all right, look, was it the case that

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Speaker 1: you know, he was in the White House on this

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Speaker 1: day apparently talking about energy policy, and then you know,

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Speaker 1: within twenty four hours there was a sudden, you know,

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Speaker 1: spike in trades on energy related securities by Mr Icon

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Speaker 1: himself or people closely associated with him. That's the kind

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Speaker 1: of pattern evidence they would look core at first, and

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Speaker 1: then if there was something interesting, h if there was

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Speaker 1: an district pattern that were to emerge, then they would

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Speaker 1: sort of dig even deeper, and they might even start

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Speaker 1: issuing subpoenas. But I think at this point where a

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Speaker 1: long way from that. What the Senator said in the

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Speaker 1: letter was the net result of what Icon did, which

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Speaker 1: was buying some of these before the election, was a

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Speaker 1: fifty million dollar windfall for CVR and Mr Icon. One

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Speaker 1: atalyst described this windfall as impossible. No one has ever

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Speaker 1: done anything like this. You're essentially betting that you really

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Speaker 1: believe there's a strong public probability the government will make

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Speaker 1: a change for the bio fuels program. So that does

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Speaker 1: sound like it's it's it's a hazardous bet. It really depends.

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Speaker 1: I mean, the thing is it's not it's I think

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Speaker 1: it wouldn't be that difficult. It seems to me to

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Speaker 1: guess after election day, or maybe on the basis of

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Speaker 1: pulling data even before election day, to get that Mr

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Speaker 1: Trump might end up taking office, and then to guess

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Speaker 1: that once he did, he would scrap all sorts of

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Speaker 1: regulations that the Obama administration has been promulgating. Right um,

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Speaker 1: And in particular, it wouldn't be that difficult to guess,

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Speaker 1: um in an educated fashion, that there would be significant

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Speaker 1: changes to energy policy. So it wouldn't necessarily then be

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Speaker 1: a win call. It could be, you know, a relatively

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Speaker 1: smart and plausible bet. On the other hand, it would

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Speaker 1: be altogether different if you happen to know in advance

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Speaker 1: that you would be being actually, uh sort of solicited

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Speaker 1: by Mr Trump for your advice, and if you knew

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Speaker 1: that you were actually an influential advisor to people like

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Speaker 1: Mr Trump. Uh, And then you were betting on the

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Speaker 1: basis of that, Right, Okay, I'm betting that, Um, I've

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Speaker 1: heard he's going to ask me advice. I'm betting he'll

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Speaker 1: take a lot of it. I'm betting in turn that

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Speaker 1: will have an effect on energy prices. So I'm going

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Speaker 1: to go ahead and speculate um indirectly on energy prices.

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Speaker 1: Then you might have something a little bit more like

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Speaker 1: insider trading, right, because you've got the inside information that

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Speaker 1: people don't have, right at least insofar as you know

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Speaker 1: precisely what you're going to be advising Mr Trump on,

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Speaker 1: whereas the outside world might know that you're advising Mr Trump,

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Speaker 1: that they might not know the specifics of what you're

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Speaker 1: advising them on. And in that case, you've got inside

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Speaker 1: information that other people don't have, and you're not allowed

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Speaker 1: to trade on that. Bob. You know, this call for

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Speaker 1: an investigation is happening at the same time a lot

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Speaker 1: of Democrats are asking questions about the ethics of things

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Speaker 1: like Ivanka Trump promoting her book and the Kushner family

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Speaker 1: doing business in China and mentioning that the president is

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Speaker 1: a key decision maker on investment visas and a sort

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Speaker 1: of other ethical questions. And now, of course we have

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Speaker 1: the firing of of FBI director. Uh. You know, is

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Speaker 1: this part of a does this feel sort of like

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Speaker 1: a part of a concerted democratic effort to paint a

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Speaker 1: picture of an ethnically troubled White House? Well, it might

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Speaker 1: be a concerted effort to paint a picture, but it

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Speaker 1: might also be viewed as a concerted effort to reveal

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Speaker 1: a picture. Right, I mean, it's not as though this

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Speaker 1: is all being fabricated by the nevercrats, right, I mean,

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Speaker 1: it is the case that there are these connections, and

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Speaker 1: it is the case that these business interests are continuing

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Speaker 1: to be pursued notwithstanding the fact that people are in

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Speaker 1: the White House. Whether that means the Trump administration is

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Speaker 1: going to be the next William Howard Taft administration, is

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Speaker 1: you still open to question. It's not clear yet, but there,

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Speaker 1: you know, I think reasonable minds can you can be

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Speaker 1: reasonable and not just a witch hunter, uh in suspecting

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Speaker 1: that we've got something kind of in the nature of

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Speaker 1: a Taft type administration forming here. But I think it's

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Speaker 1: also possible, at least at this point, it's still possible, uh,

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Speaker 1: to see to find innocence in all of this. UH.

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Speaker 1: And I think the Democrats are saying, but look, we're

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Speaker 1: we've we've kind of moved past the threshold. Now we

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Speaker 1: don't think it can any longer be uh, plausibly claimed

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Speaker 1: that these are all sort of innocent connections. They might

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Speaker 1: be wrong about that, but I don't think it would

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Speaker 1: be fair to say that they're simply inventing this or

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Speaker 1: fabricating it, or trying to paint a picture that doesn't

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Speaker 1: really have any paint behind it. Um. But Icon is

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Speaker 1: another unpaid special advisor to the president. There seemed to

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Speaker 1: be many unpaid special advisers to the president in the

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Speaker 1: Trump administration. And he's also looking to scrap a longstanding

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Speaker 1: e p A rule about that's key to enforcing the

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Speaker 1: renewable Fuel standard. How how do you judge these unpaid

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Speaker 1: special advisors and their various interests. Well, so, the dark story,

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Speaker 1: if it's the true one, would be that they actually are,

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Speaker 1: in a certain sense, being paid. Right, They're being paid

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Speaker 1: with favorable policies that they're prevailing upon the president to adopt. Right. Um.

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Speaker 1: The non dark story, the sort of the happier story

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Speaker 1: would be that, well, they just actually have bonified public

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Speaker 1: policy interests um, that you know, certain policies be pursued

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Speaker 1: and certain other policies not the uh and that you know,

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Speaker 1: they're wealthy enough that they don't really have to be

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Speaker 1: paid the advice that they give, and they're just trying

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Speaker 1: to be good citizens using their expertise to advise the

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Speaker 1: sident um. I suspect that the truth is somewhere between

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Speaker 1: those two extremes. It might well be a little bit

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Speaker 1: closer to the dark story. That certainly seems to be

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Speaker 1: what a number of the Democrats have decided is the case, um,

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Speaker 1: and it might very well turn out to be the case.

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Speaker 1: I don't feel quite confident enough to say that definitively

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Speaker 1: at this point, but I can certainly see why people

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Speaker 1: might be beginning to be suspicious. Well, we shall see

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Speaker 1: if these investigations come to be Thanks so much, as

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Speaker 1: always for being on Bloomberg Law. That's Professor Robert Hockett

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Speaker 1: of Cornell University Law School,