Letitia James Eyes Trump Tariff Trades: Insider Inquiry Tests Boundaries of Martin Act

According to sources, New York Attorney General Letitia James is quietly pursuing a potentially explosive inquiry into whether insiders close to former President Donald Trump engaged in illegal trading activity ahead of his market-moving tariff announcements. The investigation, still in its early stages, seeks to determine if individuals within Trump's orbit benefited financially from advance knowledge of dramatic shifts in tariff policy—announcements that triggered massive market swings.

At the center of the inquiry is Trump's sudden April 9 post on Truth Social that declared, "THIS IS A GREAT TIME TO BUY!!!", just hours before he announced a 90-day pause on reciprocal tariffs. That move reversed a tense standoff on trade policy, sending major indices soaring. The S&P 500 jumped 9.5%, the Nasdaq leapt 12.2%, and the Dow added nearly 8%. The New York AG’s office confirmed it is "looking at" the matter but has not yet initiated a formal investigation.

Legal experts say the probe, if it progresses, would be a historic application of the Martin Act—a 1921 New York securities law widely regarded as the most aggressive in the country. Originally authored by Assemblyman Louis Martin, the Act empowers the AG to subpoena records, compel testimony, and file civil or criminal charges without needing to prove intent or reliance by victims. This lower evidentiary threshold makes it a formidable tool.

While the Martin Act has a storied history—famously used by Eliot Spitzer in the early 2000s to take down Wall Street giants such as Merrill Lynch and AIG—its use in potential insider trading cases, especially those involving shifts in U.S. policy, is rare if not unprecedented. Former prosecutors say they are unaware of any previous Martin Act cases examining insider knowledge tied to government decision-making.

Still, the AG’s office is well within its jurisdiction. Analysts believe the inquiry likely began with unusual trading patterns observed around the April 9 date, with trading data showing outsized moves in key sectors before Trump’s public statements. From here, James' Investor Protection Bureau could send informal inquiry letters requesting documents or data—a soft pressure tactic that can precede formal subpoenas.

The political context adds layers of complexity. James, a Democrat, has clashed repeatedly with Trump, most notably securing a $454 million civil fraud judgment against him earlier this year. Critics argue this new inquiry reeks of partisanship. "This is a story of politics, not law", said NYU law professor Richard Epstein. But others insist the questions raised are legitimate, especially amid broader concerns about how public officials may influence markets for private gain.

Key questions include whether Trump or those close to him shared non-public information about the tariff reversal, and whether anyone executed trades benefiting from that information. Though Senator Elizabeth Warren and others have called for a deeper federal investigation, it is James' office—just blocks from Wall Street—that appears first out of the gate.

The end game is uncertain. A formal investigation, if launched, could eventually result in civil penalties, criminal charges, or nothing at all. But for now, the mere existence of the probe is enough to stir unease. "If the trading data shows statistically anomalous activity tied closely to Trump's announcements, that will be the first crack in the door", said Anthony Capozzolo, a former federal prosecutor.

What to watch: whether the AG escalates to formal subpoenas; whether names from Trump’s circle surface in trading activity; and whether this remains a legal curiosity or becomes a high-profile showdown over ethics, governance, and market integrity. If Letitia James has her way, the Martin Act may be tested like never before.