Senators Call for Probe into Insider Trading Ahead of Policy Decisions

Warner and Schiff demand SEC and Pentagon investigate suspicious trades before major announcements

Apr. 3, 2026 at 5:36am

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A dynamic, fragmented painting of a government building or political symbol in shades of blue, grey, and red, conveying a sense of motion and instability related to the story's theme of potential insider trading.Suspicious trading activity ahead of major policy announcements raises concerns about potential misuse of insider information.Washington Today

U.S. Senators Mark R. Warner (D-VA) and Adam Schiff (D-CA) have called for an investigation into potential insider trading violations related to large financial positions established shortly before major federal policy decisions with significant market impact were made public. The senators sent a letter to the SEC and Pentagon demanding answers about actions being taken to detect, investigate, and prevent suspicious trades tied to the misuse of nonpublic information.

Why it matters

The senators' letter raises concerns that material nonpublic information may be unevenly distributed, undermining investor confidence and the integrity of U.S. capital markets. Federal securities laws prohibit trading on insider information, and the STOCK Act applies these rules to members of Congress and federal employees.

The details

The letter cites several examples of suspicious trading activity, including a surge in S&P 500-tracking ETF call options before a tariff announcement, elevated trading in equity index products ahead of statements on U.S.-Iran talks, and a Morgan Stanley broker's attempt to invest in a defense ETF before military action involving Iran. The senators are seeking information on the agencies' tools to detect such trades, gaps in monitoring capabilities, and safeguards to prevent misuse of nonpublic government information.

  • In April 2025, there was a surge in short-term call option activity tied to an S&P 500-tracking ETF shortly before President Trump announced a 90-day pause on certain tariffs.
  • Elevated trading in products tied to major equity indices occurred in the minutes leading up to public statements suggesting U.S.-Iran talks were progressing.
  • Spikes in trading tied to major equity indices happened minutes before public indications that planned military action involving Iran would be delayed.

The players

Mark R. Warner

A U.S. Senator from Virginia and a member of the Democratic Party.

Adam Schiff

A U.S. Senator from California and a member of the Democratic Party.

Paul Atkins

The Chair of the U.S. Securities and Exchange Commission.

Platte Moring

The U.S. Department of Defense Inspector General.

Pete Hegseth

The U.S. Secretary of Defense.

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What they’re saying

“These episodes suggest a potential pattern of trading ahead of highly sensitive, market-moving government actions, with trading activity closely preceding public disclosure of those developments. The appearance that material nonpublic information may be unevenly distributed in advance of government announcements risks undermining investor confidence and the integrity of U.S. capital markets.”

— Senators Mark R. Warner and Adam Schiff, U.S. Senators

What’s next

The SEC and Pentagon Inspector General will review the trading activity described in the senators' letter and provide a briefing and written response addressing the agencies' tools, authorities, and safeguards to detect, investigate, and prevent the misuse of nonpublic information for financial gain.

The takeaway

This case highlights the need for robust oversight and enforcement to ensure that federal officials and others with access to sensitive government information do not exploit it for personal financial benefit, which could undermine public trust and the integrity of U.S. financial markets.