- President Donald Trump keeps attacking Amazon.
- Richard Painter, the top ethics lawyer to former President George W. Bush, said this could open Trump up to a securities fraud lawsuit from an investor who lost money.
- Other experts disagreed that such a lawsuit would prove fruitful.
- “Anybody can sue anybody, and someone who hates Trump probably will sue if only for the purpose of embarrassing the president and getting their self on television,” one expert said.
As President Donald Trump was lambasting Amazon on Monday, Richard Painter, the top ethics lawyer for former President George W. Bush, made a bold claim on Twitter that was retweeted more than 26,000 times.
“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,”Painter tweeted Monday.
Painter’s suggestion: Trump, by making reckless statements about the online giant, was opening himself up to a securities fraud lawsuit from an investor who lost money on the stock. Amazon’s stock price dipped substantially early this week, but has since recovered.
Trump’s recent outbursts came after reports that he was “obsessed” with Amazon, which he has targeted for more than a year, and that he wants to figure out how to hurt the company. On Monday, specifically, Trump blasted Amazon for causing the United States Postal Service to lose a lot of money, a misleading claim. He also said Amazon was responsible for the closure of a number of retail outlets.
Painter, now a University of Minnesota law professor who has experience in securities law, cited federal statutes that prohibit people from making knowingly false or reckless statements about a publicly traded company.
“A specific example is government officials who knowingly make false accusations against a public company to drive the stock price down,” he tweeted. “Investors who lose money can sue.”
Speaking to Business Insider, Painter said any reckless statement, either good or bad, could open a person up to such a lawsuit.
Experts say Trump shouldn’t worry
Many experts, however, were quick to dismiss his assertion, mostly suggesting that such a lawsuit would be difficult to pull off. They told Business Insider that for any lawsuit to have standing, “scienter” – or “evil intent” behind Trump’s statements – would have to be proven.
That would require to prove that Trump either knew his statements were untrue and made them anyway, hoping to harm the company, or was “extremely reckless.” On the surface, even if Trump’s statements are misleading, it seems unlikely he does not believe them to be true. And other experts had qualms about a lawsuit targeting Trump’s recklessness.
There were other issues too.
“There would be a number of problems with a plaintiff prevailing on such a claim,” Michael Perino, a St. John’s University law professor, told Business Insider. “The plaintiff would not only have to show that the statement was false, they would have to show that it was material – that a reasonable shareholder would consider it important in buying or selling the security.”
Perino said it was not likely that such a claim would be made unless Trump, or high-ranking officials in the administration, were involved in any trading of the stock.
John Coffee, a Columbia University law professor, told Business Insider that the law’s requirement of “extreme recklessness,” or a “conscious indifference to the truth or falsity” of the statements, may be more difficult to prove with Trump than with another potential defendant.
“Some might say that conscious indifference to truth or falsity is his normal mindset,” he said. “I also think that a president – even him – has to be given some latitude to address public figures, such as Amazon, without risk of civil liability; that flows from the First Amendment.”
Erik Gordon, a University of Michigan law professor, was particularly dismissive.
“Anybody can sue anybody, and someone who hates Trump probably will sue if only for the purpose of embarrassing the president and getting their self on television,” he said. “But there is little chance of winning and a big chance of the judge throwing the case out. The chances of prevailing on a claim that Trump’s remarks constitute securities fraud are pretty close to zero.”
Business Insider Emails & Alerts
Site highlights each day to your inbox.