Investor Found Guilty Of Insider Trading In Trump Media Merger

A federal jury in New York has convicted investor Bruce Garelick on insider trading charges. 

The case revolves around Garelick’s involvement with Digital World Acquisition Corp., a publicly traded company, and his alleged disclosure of non-public information regarding its planned merger with Trump Media, the owner of the Truth Social app.

Donald Trump, the majority shareholder of Trump Media, was not implicated in the case against Garelick, held in the U.S. District Court in Manhattan. Trump himself faces unrelated criminal charges in Manhattan Supreme Court about a hush money payment to Stormy Daniels, a former adult film star.

Two co-defendants of Garelick, Michael and Gerald Shvartsman, had previously pleaded guilty to insider trading charges on April 3.

After closing arguments from the prosecution and defense, the jury in Garelick’s case commenced deliberations on Wednesday. After several hours of deliberation, the jurors returned guilty verdicts on the five counts of securities fraud and conspiracy faced by Garelick, 54. His sentencing was scheduled for September 12.

It was revealed in the trial that Garelick, an investment advisor associated with Rocket One Capital, a venture capital firm led by Michael Shvartsman, shared confidential information about DWAC’s merger plans with Trump Media in 2021. All three individuals allegedly used this information to purchase DWAC stock before its price surged upon the announcement of the merger. Subsequently, they sold their shares, which resulted in significant profits. According to prosecutors, Garelick made approximately $49,000, while the Shvartsmans earned a staggering $23 million.

In a statement on Thursday, Manhattan U.S. Attorney Damian Williams said, “Bruce Garelick was part of a sophisticated group of individuals invited to invest in Digital World Acquisition Corporation, a special purpose acquisition company that had raised funds intending to later invest in a target company, Trump Media & Technology Group, not yet known to the public.” 

Digital World Acquisition Corp. and Trump Media merged in late March, and public trading of the company’s stock commenced shortly after that under the new DJT.

The Securities and Exchange Commission recently charged Trump Media’s former auditor, BF Borgers CPA, with significant fraud related to its accounting work for numerous publicly traded companies. The SEC claims that the fraud impacted around 1,500 filings. BF Borgers and its owner, Benjamin Borgers, have agreed to a permanent suspension from practicing as accountants before the SEC and will collectively pay $14 million in civil penalties. Trump Media has hired a new auditor, Semple, Marchal & Cooper LLP, to replace BF Borgers.

Since going public, Trump’s share in Truth Social has declined by over $1 billion.