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Trio Arrested in Insider Trading Case Tied to Trump’s Media Company Going Public, with $22M Allegedly Made Illegally

by Chloe Baker
5 comments
Insider Trading Case

On Thursday, three men from Florida were taken into custody on allegations of unlawful insider trading connected to former President Donald Trump’s media company going public, with their profits surpassing $22 million.

An indictment that was recently unveiled in a federal court in Manhattan detailed these charges but didn’t associate Trump or Trump Media & Technology Group, owner of his Truth Social platform, with the illegal acts.

This situation could complicate the ability of Trump Media to secure the expected $1.3 billion from the completion of its merger with the acquisition firm. The merger is currently under review by securities regulators.

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The indictment states that the accused individuals were invited to invest in Digital World Acquisition Corp., the special purpose acquisition company. They were allegedly given confidential information that DWAC and another acquisition company, Benessere Capital Acquisition Corp., had Trump Media in their sights.

The men are accused of purchasing millions of dollars’ worth of DWAC securities on the open market prior to the public disclosure of the Trump Media deal. After the announcement, they reportedly sold their securities at a considerable profit, according to court documents.

One defendant, as per the indictment, advised a neighbor to invest in DWAC, dubbing it a “good bet” without disclosing his source of information.

Damian Williams, the U.S. Attorney, warned that insider trading is not a shortcut to wealth and likened it to cheating. He assured that the Southern District of New York is keeping a close watch and will promptly investigate and prosecute anyone distorting our financial markets.

Those arrested were identified as Michael Shvartsman, 52, Gerald Shvartsman, 45, both brothers, and Bruce Garelick, 53. They were due to appear in a Miami court on Thursday afternoon.

Attorney Grant Smith, representing the Shvartsman brothers, declined to comment. A previous attorney of Garelick didn’t immediately respond to a request for comment.

Michael Shvartsman was the owner of Rocket One Capital LLC, a venture capital firm, where Garelick served as the chief investment officer, as per the court documents.

Garelick was given a seat on DWAC’s board of directors, which granted him access to confidential information that he then allegedly shared with his co-conspirators.

According to the indictment, the accused individuals purchased securities and shared inside information with friends and employees who also bought large quantities of securities in anticipation of the merger with Trump Media & Technology Group.

Trump Media representatives, including Trump himself, initiated discussions in early 2021 with Benessere’s principles about potentially merging to take Trump Media public.

Nonbinding letters of intent to merge were entered into by Trump Media and Benessere between March and June 2021. Although these letters required confidentiality, they allowed Benessere and its agents to share confidential information with investors in the special purpose acquisition companies.

Jay Ritter, a stock market expert from the University of Florida, opined that these new charges could hinder securities regulators from approving a merger with DWAC. However, he believes that Trump’s company might find alternative partners for funding.

If the merger fails, the $1.3 billion that Trump Media could lose would have been spent on salaries, office rent,

Frequently Asked Questions (FAQs) about Insider Trading Case

What are the charges against the three Florida men?

The charges against the three Florida men allege that they engaged in insider trading, making illegal profits of over $22 million by trading securities ahead of the public announcement of Trump’s media company going public.

Is Donald Trump implicated in the insider trading case?

No, the indictment and charges do not implicate Donald Trump or his media company, Trump Media & Technology Group, in any wrongdoing related to the insider trading allegations.

What was the impact of the charges on Trump Media’s merger plans?

The charges make it less likely that Trump Media will be able to receive the promised $1.3 billion from the merger with the acquisition firm. The merger is currently pending approval from securities regulators.

Who were the individuals arrested in this case?

The three men arrested were identified as Michael Shvartsman, Gerald Shvartsman (brothers), and Bruce Garelick, all residents of Florida.

What is the potential consequence of the insider trading allegations?

If found guilty, the defendants could face legal penalties for insider trading, including fines and imprisonment. The case is being investigated and prosecuted by the U.S. Attorney’s Office in the Southern District of New York.

What were the alleged actions of the defendants?

According to the indictment, the defendants were invited to invest in Digital World Acquisition Corp. and were provided with confidential information about a potential target, Trump Media. They allegedly purchased DWAC securities before the public announcement and sold them at a significant profit afterward.

How did the authorities become aware of the insider trading?

The indictment suggests that one of the defendants tipped off a neighbor to buy stock in DWAC, leading to suspicions and triggering an investigation by authorities.

What is the potential impact on the merger between Trump Media and the acquisition firm?

The insider trading charges could complicate the approval of the merger by securities regulators. If the merger does not proceed, Trump Media would miss out on the anticipated $1.3 billion, potentially affecting its operations and financial prospects.

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5 comments

Alex Thompson June 29, 2023 - 9:30 pm

lol insider trading is a bad bet dude, these guys cheatin’ and gettin’ caught. hope they get what they deserve. gotta watch out for them corruptin’ our financial markets. Southern District of New York on the case!

Reply
John Doe June 30, 2023 - 5:49 am

wow these guys arrested for insider trading that’s crazy making 22m$ illegally that’s a big number. trump not involved tho so he’s safe.

Reply
Emily Wilson June 30, 2023 - 9:24 am

Trump’s media merger plans might be in trouble now. If they can’t get that 1.3 billion, things won’t be goin’ smoothly for them. Maybe they’ll find some other investors to help out.

Reply
Jane Smith June 30, 2023 - 3:00 pm

omg can’t believe the charges they made so much money buyin’ securities before the big announcement and sellin’ for huge profit! but seriously, why would they tip off their neighbor? dumb move!

Reply
Sam Roberts June 30, 2023 - 7:42 pm

Insider trading is a serious crime, and these guys thought they could get away with it. But looks like they messed up big time. Wonder what’ll happen to Trump Media’s merger now.

Reply

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