Donald Trump’s team has to swallow a (somewhat) hard truth.
The federal Securities and Exchange Commission has indicted three investors who had a hand in taking Trump’s fledgling social media site Truth Social public. The trio—brothers Michael and Gerald Shvartsman and Bruce Garelick, who worked under Michael Shvartsman—are alleged to have racked up $23 million in October 2021 thanks to non-public information about the corporate maneuvers. In short, they violated confidentiality agreements and insider trading rules in the process.
The SEC, importantly, did not accuse Trump himself or his company of doing anything wrong.
December 2021 was when there seemed to be trouble at Digital World Acquisition Corporation, the company in charge of making Truth Social into a strong tech stock. This was shortly after the three traders allegedly betrayed their DWAC partners’ trust and sold the shares they had bought on privileged information. With struggling securities, the firm has been reduced to citing Fox News reports about Trump’s promise not to return to Twitter as proof of Truth Social’s 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.
The most damning part of all of this was that Garelick sat on the board of directors at DWAC, which was created for the sole and rather explicit purpose of merging with Trump’s social media venture. The indicted three knew this in advance and allegedly seized the opportunity to acquire hundreds of thousands of stakes before its official announcement so they could simply cash in after.
“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.
