On March 23, U.S. President Donald Trump abandoned his threat to strike Iranian power plants, a development that triggered sharp buying and selling swings across crude oil, equity, and other markets.
Traders have long been accustomed to Middle East developments driving large price fluctuations, but on that occasion, some traders timed their moves with remarkable precision. About 15 minutes before Trump posted on Truth Social announcing the policy reversal, contracts worth billions of dollars appeared in the market: bearish bets on crude oil and bullish bets on the S&P 500 index. The episode sparked widespread speculation that someone may have obtained an unfair information advantage.
The U.S. Commodity Futures Trading Commission (CFTC) is responsible for investigating the matter. The federal derivatives regulator has seen its scope of oversight and level of attention expand significantly with the rise of cryptocurrencies and prediction markets. A team of veteran forensic analysts within the commission, following routine procedures, compiled profit-and-loss trading data for that day's market.
People familiar with the matter, who requested anonymity because the discussions involve internal government deliberations, said analysts in the market oversight division submitted case referral materials to the enforcement division based on observed trading timing and trader identity information, leaving it to the enforcement division to decide whether to launch a full investigation into potential insider trading. The people said representatives of the two divisions also held meetings to discuss the best way to collaborate.
What happened next was highly unusual, the people said: Mel Gunewardena, a senior adviser to Trump-appointed CFTC Chairman Michael Selig, asked a supervisor on the market oversight team to withdraw the case referral materials. The team was at a loss, the people said. On a practical level, they were not even sure how to carry out the request, as such an operation had almost never occurred before.
The matter broke with convention in another way as well: in the past, veteran professionals were always responsible for collecting massive amounts of data and drafting preliminary reports — specialized yet routine work — after which enforcement division lawyers decided whether to open a case and pursue it. Now, however, an adviser to political appointee Selig intervened with the intent to revoke the referral materials and personally oversee the data collection work, the people said.
Gunewardena is a Wall Street veteran who previously worked at the CFTC during Trump's first term; he returned to the agency a few weeks ago as head of the Office of International Affairs and senior market adviser to the chairman. It is not clear to outsiders what authority he holds in this evidence-gathering process.
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