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

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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

More about Insider Trading Case

• Indictment unsealed in insider trading case
• Trump Media & Technology Group
• U.S. Attorney’s Office in the Southern District of New York
• Insider Trading Laws and Penalties
• Digital World Acquisition Corp. (DWAC)
• Securities and Exchange Commission (SEC)