Warren Delivers Warning to Institutional Investors on Trump’s Corruption Undermining our Markets; Calls for them to Act

Warren Delivers Warning to Institutional Investors on Trump's Corruption Undermining our Markets; Calls for them to Act

"Today, markets face an extraordinary new risk under President Donald Trump: coping with corruption so massive and so unprecedented that it could literally break our entire financial system."

Washington, D.C. - Today, at the Council of Institutional Investors conference, U.S. Senator Elizabeth Warren (D-Mass.), Ranking Member of the Senate Banking, Housing, and Urban Affairs Committee, called out the unprecedented corruption under the Trump Administration that undermines investor trust and the integrity of our markets. The Senator urged investment leaders in the room to act and use their power to protect the interests of working-class families and the U.S. economy and prevent irreparable damage to our financial markets and economy.

"As you know, money talks with the Trump Administration. So talk. You are some of the most critical players in the financial system with more than $5 trillion dollars in assets under management. You can see the rot just as well as anyone, but who among you has had the courage to use your enormous influence to do anything? Who among you has the courage to call out today's corruption and demand a stop to it?," said the Senator.

Below are the Senator's remarks as prepared for delivery:

Thank you for the kind introduction, Jennifer, and thank you to CII for the invitation to speak with you. Many of you are leaders of the largest investment funds in America. I appreciate the work you do to protect the retirement savings of millions of hard-working teachers, firefighters, and other workers across the country.

Like you, I believe in markets. I am proud of what American businesses can create, and I want those businesses to thrive. American ingenuity and a talented workforce are a key to our economic success. The confidence that investors at home, and around the world, place in the integrity of our markets is also a critical part of why our nation's economy is the envy of the world.

Surely many of you have read Andrew Ross Sorkin's new book, 1929. He reminds us of a time when our markets were not honest and what it cost our nation.

Sorkin's description of corruption was stunning. Insiders were routinely showered with favorable treatment by wealthy investment houses. Because they were part of the cozy elite, they were offered the chance to buy up shares before the public ever knew what was coming-what we now call insider trading. That allowed them to parlay secret, insider information into even greater wealth and power. There was an air of casual entitlement. Of course the rich play by a different set of rules; and of course ordinary investors were left to pick up whatever scraps might be left behind.

The irony of the 1929 story, in Sorkin's telling, was that mom-and-pop investors did not complain. They did not question why the insiders got a special deal; nor did they demand a level playing field. Instead, they rode the rise in the stock market on the magical assumption that it would never end. And then the crash wiped them out.

Today, about 60% of American households have direct or indirect exposure to the stock market. But back in 1929, that number was less than 3%. And yet, with only 3% of households holding or exposed to stock, the consequences of the crash were seismic. Unemployment shot to 25%. 9,000 banks closed. Millions of families' life savings were wiped out. Nearly a million family farms were lost. Devastation was everywhere-and it lasted for years. The Great Depression had multiple causes, but no one can deny the central role that cheating played.

Following the Great Depression, America sobered up and ferociously established and enforced tough, level-playing-field rules.

There has always been push and pull. We put strict rules in place - then big banks and lobbyists work to push them back. Financial watchdogs have gone after crooks but they've also looked the other way. Elected officials have tightened the rules and then loosened them. But the central idea was always that corruption is wrong, and markets and market participants are mostly honest. Today, markets face an extraordinary new risk under President Donald Trump: coping with corruption so massive and so unprecedented that it could literally break our entire financial system.

The status and stability of America's markets are subject to growing doubts around the world. Even the Financial Times is warning that "In the near term, those best positioned to ingratiate themselves with Trump will benefit handsomely. But, the longer the insider economy endures, the more it will sap the competitive motor and openness on which US economic success has been built."

I'm here to ask you to pay attention to this warning.

We have never seen corruption in the United States on this scale before. It's like an army of giant termites are chomping their way through the entire foundation of our markets-and they are moving fast.

Trump's SEC has turned from a financial cop on the beat into a willing accomplice for insider favoritism. Consider where we were 15 months ago: under the prior Chair, the SEC filed 2,700 enforcement actions against corporate crooks. Under the Trump reign, the SEC filed 300 so far - the lowest in a decade.

What happens when SEC enforcement slumbers, and you donate big time to Trump? Poof, your SEC case actually disappears. The current SEC chairman is such a lapdog, he couldn't even say at a congressional hearing that insider trading is bad. When the Chairman of the SEC can't directly say that insider trading is bad, then no investor anywhere can rely on the integrity of the markets that he oversees.

But the problem isn't simply a feckless SEC chair. The problem is a tsunami of corruption that is sweeping through Washington-a tsunami whipped up by the President of the United States.

Consider a few more examples. Donald Trump imposed illegal and chaotic tariffs that raised costs for families across the country-loudly declaring there would be no exceptions. He says that everyone will pay! Then Rolex Company gave the President center court seats at the US Open and a large, gold clock. Within months, Rolex got a huge break from those tariffs.

Or consider Apple's CEO Tim Cook. He realized that tariffs would be brutal for iPhone sales. He had already made a million-dollar contribution to President Trump's inaugural Committee, so he followed up with a personal visit to the White House. Days later, Poof! No more iPhone tariffs.

Trump's tariffs have provided profitable opportunities to many people in many ways. For example, more than a dozen Trump officials, including two cabinet secretaries, sold off stock shortly before Trump's Liberation Day announcement tanked the market. Although such trades bear all the hallmarks of a classic case of insider trading, so far there have been exactly zero reports of investigations or prosecutions by the SEC or DOJ.

Or look at the Paramount - Warner Brothers merger that requires government approval. Paramount gives millions of dollars to Trump's library to settle a bogus lawsuit. Later, Trump publicly put his finger on the scale for a Paramount deal. Is there a person alive so innocent as to believe that Trump's government will make a fair evaluation of whether to approve the deal based on the best interests of the public?

Or look at the Live Nation - Ticketmaster antitrust case. It's a textbook monopoly with one giant company owning 80% of the ticket booking for major concert venues. But Trump's Department of Justice settled the case one week into the antitrust trial. Why? Did Live Nation's half a million dollar donation to Trump's inauguration have anything to do with it? What about Trump's firing of the top antitrust enforcer? It all reeks of corruption.

And the stench of corruption is everywhere. Instead of letting the market decide, the President and his administration pick winners and losers based on how much it can enrich themselves, their families, and their closest allies.

Let's continue the review. Trump serves as the Commander in Chief of the military while the Trump family deepens its ties with the military contracting industry. Soon after Trump was elected, Donald Trump, Jr. joined 1789 Capital, a venture capital fund. Suddenly, over the next year, the firm's portfolio companies received over $70 million dollars in Defense contracts.

Meanwhile, the Commerce Department is making equity deals with rare earth mining companies. Just as the Commerce Secretary's former firm, now run by his sons, is cashing in big time by brokering a $1.5 billion dollar financing transaction related directly to that government funding.

Trump and his cronies are giving special deals to individual companies, and, in some cases, to entire industries. With breathtaking speed, the Trump family has launched crypto project after crypto project, while the administration pushes Congress and regulators to provide a huge legal glidepath for crypto. In just a smidge over a year, Trump family holdings in crypto have gone from zero to an estimated $3 billion dollars.

But there's more than money at stake. Trump and his family are making crypto deals using America's national security as a bargaining chip. Just four days before Trump's inauguration, the UAE secretly agreed to pour nearly half a billion dollars into a Trump family crypto venture, World Liberty Financial. And just a few months later, the Trump Administration authorized the sale of advanced AI chips to the UAE, despite the government's own security experts warning of the risk that the chips would be passed to China for military use.

Over in the prediction markets, Donald Trump Jr. 's investment firm now owns a substantial stake in Polymarket. People are using Polymarket and Kalshi to place bets against insiders who know about an event's outcome-or worse, can influence an event's outcome. As state regulators have raised the alarm, Trump's CFTC Chair has said he will strip the states of their right to regulate gambling within their own borders-a move that protects Donald Trump Jr.'s investment.

And have you heard about billionaire Trump donor Lucky Palmer, who's been described as "Donald Trump's Original Tech Bro"? He's trying to get his brand-new company Erebor approved as a national bank. A memo to potential investors promised that Palmer's "political network will get this done" and that a co-founder had "unique connectivity to bank regulators." And what do you know-the OCC approved the application in record time. For start ups, overt corruption is now apparently part of a successful pitch to new investors.

Instead of punishing corrupt behavior, Trump rewards it. After serving in the first Trump administration, Tom Homan, allegedly accepted a shopping bag of $50,000 dollars in cash from undercover FBI agents posing as executives seeking insider help to get government contracts from the second Trump Administration. As soon as Trump was back in the Oval Office, the case was dropped and Homan was rewarded with the post of Border Czar.

Those are more than a dozen quick examples. Each one is well documented. More than a dozen examples that raise a strong suspicion of insiders using their wealth and power to evade the rules that keep our markets honest. More than a dozen examples-any one of which - in another administration - would have produced howls of indignation and demands for investigations and jail time. Today, as in 1929, the insiders casually accept something they are entitled to.

More than a dozen examples, and who knows how much more corruption is happening out of sight?

Can anyone be confident that our markets are fair and honest when all you need to do is bribe the President or cut his family in on the action in order to tilt the playing field in your direction? How can Americans - or the world, for that matter - trust in the honesty of our markets as Trump takes a sledgehammer to their credibility?

It's easy to look at the massive corruption happening around you and say it's terrible. It's also easy to think it will never touch you because all of you in this room are honest. And the teachers, public workers, and builders you represent are honest. And the companies you invest in are honest. All that can be true, but the past 14 months have not been about one or two scandals. The Trump Administration has initiated wholesale, system-wide, pervasive corruption at a scale that will injure you and every investor you work so hard to protect.

With corruption at this level, investors cannot trust that basic rules will be enforced, so they will take their money elsewhere-other markets, other countries.

With corruption at this level, businesses cannot be certain that their new products or innovation will compete straight up in the market - and with greater uncertainty, they will pull back on productive investment.

With corruption at this level, capital that would have gone to product development or marketing is redirected to buying influence.

With corruption at this level, entrepreneurs without insider connections or money for bribes can't launch and grow their businesses.

With corruption at this level, the winners will be the biggest companies with the most to spend on bribes and hiring politically-connected insiders. As a result, the giants will get even bigger and wipe out the smaller businesses that are often the source of real innovation.

With corruption at this level, cheating everywhere becomes normalized-in the stock market, on taxes, on employment and environmental laws, on building codes. And when pardons are for sale, the sense that only suckers follow the rules means that voluntary compliance with the laws evaporates and cheating explodes.

Study after study shows that corruption significantly reduces growth and investment, even in the United States. And those studies focus on modest corruption-not the kind of tipping-point corruption that is currently sweeping through the US economic system.

There is a reason that businesses are reluctant to invest capital in corrupt economies. Look around the world at the number of countries that have extraordinary natural resources and yet cannot sustain a stable, growing market because no investor believes that smart business decisions will be rewarded and laws will be honestly enforced. Anyone who thinks the United States will be forever exempt from such forces is willfully blind.

Donald Trump is tearing down what took a century to build, and so far, those so-called market-loving Republicans have remained largely silent.

So what are we planning to do?

Every one of us has a responsibility.

Congress should pass stronger anti-corruption laws, but even without new laws, there's plenty to do. The SEC and CFTC should catch crooks instead of protecting them. The Department of Justice should prosecute public corruption instead of promoting it. Agencies should make decisions unmarked by political influence. It's simple: federal regulators should follow the laws that built trust in our markets, and I'm certainly going to use the tools available to me to push in that direction.

But each of you has a responsibility too. As you know, money talks with the Trump Administration. So talk. You are some of the most critical players in the financial system with more than $5 trillion dollars in assets under management. You can see the rot just as well as anyone, but who among you has had the courage to use your enormous influence to do anything? Who among you has the courage to call out today's corruption and demand a stop to it?

You are long-term investors. You speak in terms of decades, sometimes generations. But are you honest with yourselves about the long-term costs of Trump's corruption and its corrosive effect on our economy? Are you honest about the costs to American retirees who have worked hard for their pensions? Are you giving silent permission for this problem to spread into every corner of our economy?

I have not given up on the original promise of our capital markets. But mark my words: if everyone keeps their head down, if good people keep going along for the ride, and if no one reins in this corruption, our standing in the world will crater, our economy will falter, and our people will pay for this for generations to come.

The level of corruption over the past 14 months threatens the survival of our financial markets and the health of our entire economy. Listen again to the Financial Times: The longer the insider economy endures, the more it will sap the competitive motor and openness on which US economic success has been built. You are the guardians. I urge you to act before it is too late.

Thank you for having me here. I hope my speech today does some good.

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