Two investors have pleaded guilty to an insider trading scheme related to the recent merger involving Trump Media and Technology Group, the parent company behind former President Donald Trump's Truth Social media platform.
Damian Williams, the United States Attorney for the Southern District of New York, said on Wednesday that Michael Shvartsman and Gerald Shvartsman have each pleaded guilty to a single sound of securities fraud related to a scheme they concocted to benefit from the merger between Digital World Acquisition Corporation and Trump Media.
"Michael and Gerald Shvartsman admitted in court that they received confidential, inside information about an upcoming merger between DWAC and Trump Media and used that information to make profitable, but illegal, open-market trades," said Williams in a prepared statement. "Insider trading is cheating, plain and simple, and today’s convictions should remind anyone who may be tempted to corrupt the integrity of the stock market that it will earn them a ticket to prison."
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According to the United States Attorney's Office for the Southern District of New York, the two men "bought millions of dollars of DWAC securities on the open market before the news of the Trump Media business combination was public" and even "tipped others about the upcoming merger, inducing further trades in DWAC securities on the basis of the MNPI they had obtained subject to their non-disclosure agreement and through their associate’s board seat."
Per CNN, "There was no allegation in the indictment that Trump himself had any involvement in the alleged insider trading scheme."
Trump Media first went public last week and sparked a wave of speculative investment that saw the firm's market cap rise to over $8 billion before its shares crashed on Monday when it released a financial report showing that the company lost $58 million over the last fiscal year on revenues of just over $4 million.
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