Trump's attacks on Amazon might have broken the law, says former White House ethics lawyer

This week, U.S. President Donald Trump bashed Amazon both on social media and the podium. 

Trump said Amazon's package delivery contract with the U.S. postal service amounts to a "scam." He also accused the company of putting thousands of retailers out of business and not paying its fair share of taxes.

The president then went after the retail giant's CEO, Jeff Bezos, who also owns The Washington Post. 

Trump's words sent shockwaves through Amazon's stocks and created a ripple effect in the broader stock market.

Richard Painter, who was the chief ethics lawyer during the Bush administration, has been watching the reaction to Trump's views on Amazon. 

He told Day 6 host Brent Bambury that Trump's attack on the company could amount to market manipulation under U.S. securities laws. 

What has been your reaction watching President Trump tweet about Amazon this week? 

First of all, he's doing this to retaliate against Jeff Bezos, the owner of The Washington Post. It's not Amazon that he's upset at. It's The Washington Post. But since Mr. Bezos is connected with both companies and he's the founder of Amazon, he wants to attack him personally. So he's going after Amazon, and accusing the company of illegal conduct and other things that are demonstrably false. That's very disturbing because our First Amendment guarantees freedom of the press and he's using his official power as president of the United States to retaliate for what's published in The Washington Post. 

He seems to do whatever he wants, when he wants to. He's very impulsive.- Richard Painter, former chief ethics lawyer for Bush administration

And he's doing it by going after a publicly held company. A lot of Americans hold stocks in Amazon, as do many Canadians. What did you make of that?

That's another problem, because this is a publicly held company. People are buying its stocks every day. It is a violation of federal securities laws to knowingly, or with extreme recklessness, make false statements about a publicly held company when you know that that could impact the stock price. So the president may very well be in violation of the securities laws as well as having violated the First Amendment of the constitution. He definitely should not be doing this and it's really unfair to the stockholders who see their stocks gyrating all over the place because of false statements made by the president of the United States. 

Do you imagine that the ethics lawyers in the White House now are telling President Trump this?

I don't know if anybody in that White House has the courage or the ability to tell this president what to do or what not to do when it comes to tweeting and shooting his mouth off. He seems to do whatever he wants, when he wants to. He's very impulsive.

But does the president enjoy any immunity from securities law because he is the president of United States?

That might or might not be the case with private lawsuits brought by investors, but I would think that the president should comply with the securities laws, comply with the ethics laws and the United States Constitution just like everyone else. This is a demonstrably false statement, probably made knowingly or with extreme recklessness about a publicly traded security. 

In that case, what recourse do you imagine shareholders would have?

They can complain to the FCC (Federal Communications Commission) and see if the Securities Exchange Commission wants to remind the president of the United States that he should not make false statements about public companies. Second, they could talk to Congress. I mean Congress has some responsibility to rein this president in when he engages in illegal conduct. Third, they could try to sue, but there would be difficulties there with respect to demonstrating a loss and a bunch of other factors.

I just want to push back on this idea that the statements are false or reckless. Because among other things, Trump says that Amazon doesn't pay its fair share of taxes, local and state taxes. As president of the country, isn't he within his rights to say that, to allege that?

When he says that they don't pay their fair share, that's a policy statement. But his statements have gone further than that to have alleged what amounts to fraud on the part of Amazon. That's where you get yourself into some very difficult territory, when you're making an accusation against a public company of an illegal conduct. And to the extent he's doing that, that is false. There's no demonstration that Amazon has committed fraud or anything illegal. 

You've served as White House ethics lawyer. If you were Mr. Trump's ethics adviser right now, what would you be telling him about his attacks on Amazon?

I tell him to cut it out and stop trying to pick favourites in the private sector, and stop trying to retaliate against people for using the freedom of the press. And once again, I want to get back to what this is all about. It's about The Washington Post, and the fact that Jeff Bezos owns The Washington Post. President Trump doesn't like the coverage he's getting in The Washington Post. That's the core issue here. 

This interview has been edited for length and clarity. To hear more from Richard Painter, download our podcast or click the Listen button at the top of this page.