On May 24, just before US lawmakers reached an agreement on the country’s debt limit, an unknown investor made a bullish bet on Equitrans Midstream Corp., a company related to the construction of the Mountain Valley Pipeline, by acquiring 100,000 call options on its stock. Three days later, Republicans and Democrats agreed to suspend the debt limit until 2025, and President Joe Biden signed the deal into law, including approval of the pipeline and the necessary permits for its construction.
The mystery investor’s bet turned out to be successful and very profitable, as he made $7.5 million last Friday. This has raised questions about whether his decision to invest in Equitrans Midstream and his sudden profit were due to more than luck and market skills. Some ethics experts and economics professors have raised questions about possible insider leaks and government connections.
Prior to the debt deal, the outlook for the Mountain Valley pipeline project was uncertain due to protracted environmental litigation. Equitrans Midstream shares fell 35% last year and only recovered after the lawmakers’ announcement. Last week, the stock experienced a record 49% gain.
So far, no one has been charged with any wrongdoing related to the purchase of the call options. Investigating such an investment and determining whether it was based on improperly shared confidential information is extremely difficult. Although US officials, including members of Congress, are prohibited from trading on confidential information obtained in the course of their duties, there are ambiguities in the law that make it difficult to prosecute in cases of suspicion.