Marshall School of Business - Hillary Clinton's Cattle Futures Trading Profits

Two-thirds of her trades showed a profit by the end of the day she made them and 80 percent were ultimately profitable.

On October 11, 1978, while Bill Clinton was attorney general of Arkansas, Hillary Clinton opened a futures account with a broker named Robert L. "Red" Bone. She traded the account under the guidance of James Blair. Blair was then an attorney working as outside counsel to Tyson Foods Inc., a large Arkansas food chicken-processing firm. Bone had formerly worked for Tyson Foods. She put $1,000 into the account and apparently gave Blair authority to manage it. Over the next year, profits from the account were just under $100,000.

These results are quite remarkable. Two-thirds of her trades showed a profit by the end of the day she made them and 80 percent were ultimately profitable. Many of her trades took place at or near the best prices of the day.

Only four explanations can account for these remarkable results. Blair may have been an exceptional good trader. Hillary Clinton may have been exceptionally lucky. Blair may have been front-running other orders. Or Blair may have arranged to have a broker fraudulently assign trades to benefit Clinton's account. Many people familiar with these markets think that the first two explanations are exceedingly unlikely. Well-informed traders rarely trade with such remarkable success and consistency.

Although no evidence of fraudulent trade assignment has ever surfaced, this explanation seems most likely to many people. Here is a simple example of how a dishonest broker could achieve this objective: Execute buy and sell orders in the same contract. The contract price will eventually go up or go down. If it goes up, assign the profitable buy trades to the favored account and assign the losing sell trades to an account owned by the benefactor. If the price falls, assign the profitable sell trades to the favored account and assign the losing buy trades to the benefactor's account.

Many of Clinton's political enemies believe that the scheme was designed to surreptitiously transfer an illegal bribe or gratuity to Clinton in exchange for a political favor or for political influence. They believe that Don Tyson--a major political supporter of Clinton--was the benefactor.

Fraudulent trade assignment is difficult in electronic trading systems. Such systems typically require brokers to enter client account numbers when submitting orders.

(Sources: The Washington Post, May 27, 1994, page A1. National Review v. 47 no. 3, p. 43, February 20, 1995.)