Donald Trump is one of the few people in the world who can literally send a stock cratering in 280 characters or less. We’ve seen this happening in real time in the last two weeks, during Trump’s Twitter war with Amazon.
Since Thursday, Trump has taken to Twitter numerous times to rail against the e-commerce giant. His main beef? Amazon’s founder and CEO, Jeff Bezos, also owns The Washington Post, which has been one of Trump’s most vociferous critics.
The feud reached a fever pitch on Monday, when Trump accused Amazon of stiffing the Post Office and not paying its fair share of taxes.
Only fools, or worse, are saying that our money losing Post Office makes money with Amazon. THEY LOSE A FORTUNE, and this will be changed. Also, our fully tax paying retailers are closing stores all over the country…not a level playing field!
— Donald J. Trump (@realDonaldTrump) April 2, 2018
That tweet sent Amazon’s stock into free fall. Specifically, it dropped by 5.2 percent, erasing $36 billion of its market value. And it dragged the rest of the market down with it; the Dow Jones Industrial Average fell 459 points, while Nasdaq was off three percent.
Investors feared that Trump’s railing against Amazon could mean that he’s considering more regulation. Indeed, according to Ian Winer of Wedbush Securities, when a president attacks a company in this way, it “runs counter to the concept of a ‘free’ market.”
But Richard Painter, the former chief ethics counsel to George W. Bush, thinks Trump’s attacks on Amazon aren’t just unseemly. They might be illegal.
Painter may be one of the few sane people left in the Republican Party. He hasn’t let his party ties blind him to Trump’s blatant violations of the Emoluments Clause, which bars any government official from accepting gifts from a foreign country. For the last two years, Painter has led the effort to turn the hot lights on Trump’s decision to continue allowing proceeds from his real estate empire’s dealings with foreign governments and state-owned companies to flow into his bank account. He and a number of other legal experts from both parties believe that Trump could not honestly take the oath of office as a result, and therefore committed an impeachable offense from the moment he was sworn in.
But Painter believes that Trump stepped on another legal land mine with his ranting about Amazon.
Trump violates the 1st Amendment by retaliating against the Washington Post and may be violating federal securities laws.
Securities fraud includes knowing false statements about a publicly traded company. 1934 Act Section 10(b); Rule 10b-5 https://t.co/UqXy8uAArS via @CNNMoney— Richard W. Painter (@RWPUSA) April 2, 2018
A specific example is government officials who knowingly make false accusations against a public company to drive the stock price down. Investors who lose money can sue.
— Richard W. Painter (@RWPUSA) April 2, 2018
Where’s Painter coming from? Well, a number of officials have explained to Trump that Amazon pays the same discounted rate as other bulk shippers. Even though the Post Office is losing money overall, it’s making a killing on e-commerce. Indeed, the e-commerce boom has led the Post Office to increase Sunday delivery in some markets. Moreover, it charges sales tax in 45 states and the District of Columbia.
On this basis, Politifact rated Trump’s railings about Amazon as “False,” while The Post’s Fact Checker gave them three Pinocchios. But Painter thinks this isn’t just another garden-variety case of alternative facting. He thinks Trump could potentially be hauled into court for making statements about Amazon that he knows or should have known aren’t true.
If you lost money today trading in Amazon stock or any other security, and you know of anyone who knowingly or recklessly made a false public statement about that company or its stock, causing your losses, you should contact a securities lawyer today.
— Richard W. Painter (@RWPUSA) April 2, 2018
If Painter intended this as a warning to Trump, the warning went unheeded. On Tuesday, Trump unleashed another 280-character attack on Amazon.
I am right about Amazon costing the United States Post Office massive amounts of money for being their Delivery Boy. Amazon should pay these costs (plus) and not have them bourne by the American Taxpayer. Many billions of dollars. P.O. leaders don’t have a clue (or do they?)!
— Donald J. Trump (@realDonaldTrump) April 3, 2018
At the time Trump fired off this tweet, Amazon had actually recovered 1.4 percent of what it lost on Monday. But within 11 minutes, Amazon was back in the red. While Amazon managed to recover enough for an overall gain of 1.4 percent, it has still lost $50 billion of its market value since Axios reported that the Donald had the company in his crosshairs.
That triggered another not-so-veiled warning from Painter.
Knowing or reckless false statements about a publicly traded company that impact its stock price can violate federal securities laws. Section 10(b), Rule 10b-5. SEC and plaintiffs' lawyers take note.https://t.co/UcKcYZX2W0 via @CNNMoney
— Richard W. Painter (@RWPUSA) April 3, 2018
It can be safely assumed that there are a lot of people who could theoretically have the financial wherewithal to withstand Trump’s tendency to simply run out the clock when he’s hauled into court.
Amazon hasn’t given us a lot of reason to root for it lately. But then again, we’re dealing with a president who thinks he can use the power of his office to bully his critics into submission. That can’t be allowed to stand. And if there’s a way to legally hold him to account, hopefully someone has the guts to do so.
(featured image: photo art courtesy Ben Park, Vanity Fair)
