Remember Trump’s Merger Windfall? It’s Because of Insider Trading.
Two investors in the shell company that merged with Trump Media & Technology Group, or TMTG, the parent company of Donald Trump’s personal social media platform Truth Social, pleaded guilty Wednesday to insider trading, the latest in the organization’s laundry list of recent issues.Florida venture capitalist Michael Shvartsman and his brother Gerald pleaded guilty in New York to one count of securities fraud, and could face up to 20 years in prison, according to a statement from the U.S. Attorney’s Office in the Southern District of New York. In October 2021, the pair made more than $22 million in illegal profits by using insider knowledge and trading in securities of the Digital World Acquisition Corporation, or DWAC, ahead of its merger with Trump’s company. The Shvartsmans were later arrested and charged in June last year. “Michael and Gerald Shvartsman admitted in court that they received confidential, inside information about an upcoming merger between DWAC and Trump Media and used that information to make profitable, but illegal, open-market trades,” said U.S. Attorney Damian Williams in a statement. The Shvartsmans plea comes after a rocky couple of weeks for TMTG. After the company’s initial public offering last week, its stock price surged to $57 a share, valuing the company at $8 billion. But in the past few days, everything has come crashing back to earth. The company’s SEC filings, released Monday, showed massive losses of $58 million, sending its stock price plummeting, with auditors expecting the company to lose even more money in the future. Trump’s social media venture could make him a lot of money, which he desperately needs to pay his many legal bills. But he’s not legally allowed to sell off any of his 72 million shares in the company for six months without permission from his company’s board of directors, as it would lead to a steep drop in the stock price. He still might manage to do so anyway, considering that the board, made up of former administration staffers, political allies, and his son Donald Jr., would likely rubber-stamp such a request.
Two investors in the shell company that merged with Trump Media & Technology Group, or TMTG, the parent company of Donald Trump’s personal social media platform Truth Social, pleaded guilty Wednesday to insider trading, the latest in the organization’s laundry list of recent issues.
Florida venture capitalist Michael Shvartsman and his brother Gerald pleaded guilty in New York to one count of securities fraud, and could face up to 20 years in prison, according to a statement from the U.S. Attorney’s Office in the Southern District of New York.
In October 2021, the pair made more than $22 million in illegal profits by using insider knowledge and trading in securities of the Digital World Acquisition Corporation, or DWAC, ahead of its merger with Trump’s company. The Shvartsmans were later arrested and charged in June last year.
“Michael and Gerald Shvartsman admitted in court that they received confidential, inside information about an upcoming merger between DWAC and Trump Media and used that information to make profitable, but illegal, open-market trades,” said U.S. Attorney Damian Williams in a statement.
The Shvartsmans plea comes after a rocky couple of weeks for TMTG. After the company’s initial public offering last week, its stock price surged to $57 a share, valuing the company at $8 billion. But in the past few days, everything has come crashing back to earth.
The company’s SEC filings, released Monday, showed massive losses of $58 million, sending its stock price plummeting, with auditors expecting the company to lose even more money in the future.
Trump’s social media venture could make him a lot of money, which he desperately needs to pay his many legal bills. But he’s not legally allowed to sell off any of his 72 million shares in the company for six months without permission from his company’s board of directors, as it would lead to a steep drop in the stock price. He still might manage to do so anyway, considering that the board, made up of former administration staffers, political allies, and his son Donald Jr., would likely rubber-stamp such a request.
