WASHINGTON, DC - JANUARY 20: First Lady Melania Trump dance at the Freedom Ball on January 20, 2017 in Washington, D.C. Trump will attend a series of balls to cap his Inauguration day. (Photo by Kevin Dietsch - Pool/Getty Images)
Three investors have been indicted by the Securities and Exchange Commission (SEC) for their plans to make Donald Trump’s Twitter alternative Truth Social live.
The three men, Michael and Gerald Shvartsman and Bruce Garelick, violated their insider trading rules confidentiality agreement by making $23 million in October 2021 through illegal trading.
Neither Trump, his company nor Trump Media & Technology Group Corp, who owns Truth Social, was accused by the SEC of wrongdoing.
Trump was recently indicted on 37 federal counts for illegally retaining classified government documents and storing them in a toilet at his Mar-a-lago residence in Florida. He also announced that his kids will not be returning to the White House, should he win the 2024 election.
Rumors were circulating back in December 2021 that the company in charge of taking Truth Social public, Digital World Acquisition Corporation (DWAC), was in trouble. These rumors began after traders from DWAC betrayed their partners’ trust by selling shares they purchased using privileged information.
Since its launch, Truth Social has struggled to create interest and now has to rely on Trump’s pledge that he will not return to Twitter that the company is still viable. Nasdaq has already threatened the company to remove it from its exchange.
A board of directors was created at DWAC, which Garelick was a part of, to merge with the social media enterprise Trump created. The three investors had access to the information about the plan to merge before anyone else and they took this as an opportunity to buy hundreds of thousands of stakes before the announcement was made. They then took these stakes and sold them to make millions of dollars.
The director if the SEC’s Division of Enforcement, Gurbir Grewal, stated in a press release, “This case demonstrates the Commission’s ongoing commitment to exposing insider trading wherever it occurs.”
The two brothers, Michael and Gerald, have hired the attorneys Robert Buschel and Grant Smith. They are well known for representing Roger Stone, who was an adviser to Trump
The company is currently not doing well, as one share is trading at less than $13, which is around what it sold for when investors originally bought it.
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