Trump Media alerts Nasdaq to potential DJT stock manipulation

Trump Media alerts Nasdaq to potential DJT stock manipulation

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Trump media has warned the CEO of the Nasdaq Stock Market about “potential market manipulation” of the company’s shares through “naked” short selling of stocks.

The warning came as Trump Media gave shareholders detailed instructions on how to prevent anyone from lending their DJT shares to short sellers, who then make trades betting that the stock price will fall.

Trump Media relayed the warning to Nasdaq CEO Adena Friedman in a filing with the Securities and Exchange Commission on Friday morning.

DJT’s stock price has risen in recent days, but is still well below the $70-plus per share at which the company debuted on March 26. Former President Donald Trump owns nearly 60% of Trump Media shares. The paper value of its stake has fallen by billions of dollars since DJT began publicly trading last month.

Trump Media CEO Devin Nunes, in his letter to Friedman, did not directly accuse anyone of naked short selling, or selling stocks without first borrowing for such sales.

But Nunes pointed out that as of Wednesday, DJT “appears on Nasdaq’s ‘Reg SHO Limit List,’ which is an indication of unlawful trading activity.”

“This is particularly concerning because ‘naked’ short selling often results in sophisticated market participants profiting at the expense of retail investors,” Nunes said.

Nunes, who owns the Truth Social app, pointed to circumstantial evidence, including that DJT was the most expensive short-selling stock in the United States in early April, which he said would give brokers “a significant financial incentive to sell non-existent stocks.” to lend”. ” The letter references a CNBC article that details the premiums brokers charge short sellers for selling DJT stock loans.

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“I am writing to alert you to possible market manipulation in the shares of Trump Media & Technology Group Corp. to draw attention.” Nunes wrote.

“As you know, ‘naked’ short selling – selling shares of a stock without first borrowing what are considered hard to find shares – is generally illegal under the Securities and Exchange Commission’s (‘SEC’) Regulation SHO,” he wrote.

“The data provided to us shows that only four market participants were responsible for over 60% of the extraordinary volume of DJT shares traded: Citadel Securities, VIRTU Americas, G1 Execution Services and Jane Street Capital,” Nunes wrote.

“In light of the foregoing and Nasdaq’s commitment and obligation to protect the interests of retail investors, please explain to us what steps you can take to promote transparency and compliance by ensuring that market makers comply with Reg SHO, that requires brokers to disclose their net short positions.” “Positions and preventing the borrowing of stocks that do not exist,” Nunes wrote.

“TMTG looks forward to supporting you in your endeavors.”

A Nasdaq spokesperson told CNBC: “Nasdaq is committed to the principles of liquidity, transparency and integrity across all of our markets.”

“We have long advocated for transparency in short selling and actively support the SEC’s rules and enforcement efforts designed to monitor and prohibit naked short selling,” the spokesperson said.

A spokesman for VIRTU declined to comment.

CNBC has also requested comment from Citadel Securities, G1 Execution Services and Jane Street Capital.

Trump, the presumptive Republican presidential nominee, is currently in New York state court on criminal charges related to a hush money payment from his then-lawyer to porn actor Stormy Daniels in 2016.

This is breaking news. Please check back for updates.

Correction: This article has been updated to correct the spelling of Adena Friedman’s name.

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2024-04-19 14:08:52