According to a report, in anticipation of the planned merger between former president Donald Trump’s social media firm and a shell corporation in late 2021, US authorities accused three individuals of insider trading last Thursday.
Using inside information regarding Digital World Acquisition Corp.’s (DWAC) planned merger with Trump Media & Technology Group, Gerald Shvartsman, Michael Shvartsman, and Bruce Garelick reportedly profited over $22 million trading in DWAC. DWAC is a so-called “special purpose acquisition company,” or Spac.
Donald Trump and his business (TMTG) were not involved.
US attorney Damian Williams made the announcement in Manhattan. Requests for feedback from DWAC were not met with an instant response. The names of the defendants’ attorneys were not immediately available.
The prosecution said the alleged scam started after the defendants invested in DWAC and Garelick was appointed director.
Allegedly, Garelick started passing along the information to the group regarding the progress of merger discussions and when they may expect an announcement. The Florida defendants were accused of purchasing DWAC stock, tipping others to purchase, and selling at a “significant profit” after publicizing merger plans.
Five to seven counts of fraud and conspiracy have been filed against each defendant, potentially subjecting them to many years behind bars.
A report shows the blank-check corporation, under regulatory investigation and scheduled to combine with former President Trump’s media organization, struck an agreement with the Securities and Exchange Commission (SEC), according to a filing.
Trump Media & Technology Group (TMTG), Trump’s new media firm, merged with DWAC in October 2021 to go public. The DOJ and SEC’s investigations cast doubt on the SPAC agreement. The SEC will issue a cease-and-desist order if the settlement is approved, finding DWAC violated antifraud provisions in the planned transaction.
DWAC stated in the petition that failing to deal with the SEC would lead to a considerable risk of prolonged litigation and prevent the firm from merging with TMTG or another target. DWAC claimed it could not settle without Trump’s media firm’s expressed agreement.