Apparently Donald Trump isn’t the only one having trouble with the truth.
While the former president battles the Department of Justice and the Manhattan district attorney, the Securities and Exchange Commission has indicted three investors involved in taking Trump’s fledgling Twitter alternative Truth Social public. The regulators allege that the trio—brothers Michael and Gerald Shvartsman and Bruce Garelick, who worked for Michael Shvartsman—rolled up $23 million in October 2021 thanks to non-public intel about the corporate maneuvers, violating confidentiality agreements and insider trading rules in the process.
The SEC did not accuse Trump himself or his company of wrongdoing, and Truth Social’s ownership entity, Trump Media & Technology Group Corp., did not immediately respond to a request for comment.
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Rumblings of trouble at Digital World Acquisition Corporation, the company in charge of turning Truth Social into a hot tech stock like its rivals, started back in December 2021, shortly after the troika of traders allegedly betrayed their DWAC partners’ trust and sold the shares they had bought on privileged info. The firm’s securities have since struggled to attract interest, and it has been reduced to citing Fox New reports about Trump’s pledge not to return to Twitter as proof of its viability. The Nasdaq threatened to remove the company from its exchange in March.
It currently trades at a little under $13 a share, only a little more than it sold for when the indicted investors first bought in.
What made the alleged insider trading by the venture capitalists in the case especially galling, according to the SEC, is that Garelick sat on board of directors at DWAC, which was created for the sole purpose of merging with Trump’s social media enterprise. The three were privy to the merger plan before the rest of the investment world, and allegedly seized the opportunity to acquire hundreds of thousands of stakes before its official announcement, allowing them to cash in afterward.
“This case demonstrates the Commission’s ongoing commitment to exposing insider trading wherever it occurs,” Gurbir Grewal, director of the SEC’s Division of Enforcement, said in a press release.
The New York Times reported that the Shvartsman brothers have retained attorneys Grant Smith and Robert Buschel, most famous for representing Roger Stone, the political trickster who has long served as a formal and informal adviser to Trump. Smith declined to comment on the charges on behalf of his clients. A lawyer for Garelick did not immediately respond to a request for comment.
