CFTC Chairman's Adviser Told Staff to Retract Insider-Trading Referral on Pre-Trump Iran Post Oil Trades, Bloomberg Reports

A senior adviser to the chairman of the Commodity Futures Trading Commission told career staff to withdraw an insider-trading referral tied to oil trades made minutes before President Trump's March 23 Iran announcement, Bloomberg reported today, Oct. 13.

The report rests on Bloomberg's own sourcing. The CFTC and the White House have not confirmed the retraction request. Nobody has been publicly accused of insider trading.

What happened on March 23

At about 7 a.m. ET that Monday, Trump posted on Truth Social that he was postponing all military strikes on Iranian power plants and energy infrastructure for five days, citing progress in talks with Tehran. Iran's parliament speaker, Mohammad-Bagher Ghalibaf, denied later that day that any negotiations had taken place.

Markets moved hard. Brent crude fell as much as 14%, U.S. crude dropped by double digits, and American and European equities climbed about 4% from session lows to highs.

The trading before the post is what drew attention. Billions of dollars in contracts betting oil would fall and the S&P 500 would rise changed hands about 15 minutes earlier. The Financial Times calculated that roughly 6,200 Brent and West Texas Intermediate contracts, worth about $580 million, traded between 6:49 and 6:50 a.m. ET.

The referral and the reported intervention

According to Bloomberg, analysts in the CFTC's Division of Market Oversight reviewed the day's winners and losers, identified who was behind the well-timed trades, and sent a referral to the Division of Enforcement. That division decides whether to open a full insider-trading investigation. Bloomberg reports the two divisions also met to discuss how to work together.

Then, Bloomberg reports, Mel Gunewardena told a supervisor on the market oversight team to retract the referral. Gunewardena is a senior adviser to Chairman Michael Selig, a Trump appointee. He rejoined the agency a few weeks earlier as head of the Office of International Affairs and Senior Markets Advisor to the chairman. Bloomberg says it was unclear what role he held in gathering the evidence, and that he took over the data collection.

The analysts did not know how to proceed, Bloomberg reports, since a referral had rarely, if ever, been pulled back before. It also broke with practice. Career staff gather data and write preliminary reports, and enforcement attorneys decide what to pursue.

Aitan Goelman, the CFTC's enforcement director from 2014 to February 2017, was asked about such an intervention in general terms. "In every previous administration I'm familiar with, that would not just have been unusual — but never done," he said. "It makes it harder for the staff, if they know that any moment the rug can get pulled out from under them."

The White House response and the agency's public stance

The White House rejects the premise that anyone in the administration profited. Spokesman Kush Desai said the focus of the president and his officials is on what is best for the American people, and called the implication "baseless and irresponsible."

Goelman was speaking generally, not about the specific facts here. Bloomberg's account also leaves open what Gunewardena was actually doing. An adviser overseeing data collection is not, on its own, evidence that an inquiry was shut down.

The CFTC's leaders have said publicly that they would pursue this kind of conduct. Enforcement Director David Miller said on March 31 that the agency was watching speculation about insider trading in its markets. Selig told the House Agriculture Committee on April 16 that anyone engaging in fraud, manipulation or insider trading would be found and would "face the full force of the law." Staff also received an internal memo in March warning them against trading on confidential information.

The timeline since March

The inquiry first surfaced on April 15, when the CFTC was reported to have asked CME Group and Intercontinental Exchange for data identifying the traders. It can request WTI records directly from CME. For Brent contracts, which trade in London, it had to go through the UK's Financial Conduct Authority.

Reports later that month said the Justice Department was also examining the trades. Neither agency has commented.

Congress had already pressed the issue. Senators Elizabeth Warren and Sheldon Whitehouse wrote to Selig on April 9, asking the enforcement division to examine the March 23 trading and a separate, larger bet.

What is unresolved

The central questions are all still open. Did enforcement receive the referral before it was withdrawn? Has a full investigation been opened? Who traded the contracts, and did they have access to nonpublic information about Trump's decision?

Selig's April testimony set a public standard. The next test is whether the agency can show that the March 23 trades were examined by the staff assigned to examine them. Warren and Whitehouse have not yet said how they will respond to the new reporting.