Bruce Garelick walks after a hearing in Manhattan Federal Court in New York City on July 20, 2023.
Amr Alfiky | Reuters
A federal jury in New York convicted an investor on Thursday of insider trading in the shares of a shell company before it announced it would merge with it in October 2021 Trump media.
The investor, Bruce Garelick, was on the board of publicly traded Digital World Acquisition Corp. when he was accused of sharing and exploiting nonpublic information about its plans to merge with the then-listed company. Privately held Trump Media is the owner of the Truth Social app.
Trump Media’s majority shareholder is former President Donald Trump, who was not accused of wrongdoing in Garelick’s trial in U.S. District Court in Manhattan.
But Garelick’s trial, which began April 30, was held just blocks from where Trump is being tried in Manhattan Supreme Court on criminal charges related to a hush-money payment to porn star Stormy Daniels.
Two of Garelick’s co-defendants, brothers Michael and Gerald Shvartsman, pleaded guilty April 3 to insider trading charges.
Jurors in Garelick’s case began deliberating Wednesday afternoon after hearing closing arguments from prosecutors and a defense attorney. After deliberating for several hours Thursday, jurors returned guilty verdicts on the five counts of securities fraud and conspiracy facing Garelick, 54.
Garelick, who testified at his trial, is scheduled to be sentenced on September 12.
Garelick was an investment advisor for Michael Shvartsman’s venture capital firm Rocket One Capital. Prosecutors said Garelick disclosed non-public material information about DWAC’s merger plans with Trump Media to the Shvartsman brothers in 2021 after joining the DWAC board.
All three men then bought DWAC shares based on that nonpublic information and then sold them after the price soared following the announcement of the deal to merge with Trump Media, prosecutors said.
Garelick only made $49,000 in profit from the illegal business, but the Shvartsmans made a whopping $23 million, according to prosecutors.
“Bruce Garelick was among a sophisticated group of individuals invited to invest in Digital World Acquisition Corporation…, a special purpose acquisition company that had raised funds with the intent of later investing in a target company, not Trump Media & Technology Group “The investment is yet to be made public,” Manhattan U.S. Attorney Damian Williams said in a statement on Thursday.
“When given this opportunity, Garelick promised to keep the information about DWAC’s interest in acquiring Trump Media secret and not to use it for trading on the stock exchange. Garelick also received a seat on the DWAC board, which gave him direct access to additional non-public information about the acquisition, Williams said.
“As a unanimous jury has just found, Garelick blatantly violated the law by using the information he obtained as an insider at DWAC to do business with and tip others,” the top prosecutor said . “Garelick’s federal conviction is another stark reminder that insider trading is always a losing bet.”
DWAC and Trump Media completed their merger at the end of March. A day later, the company’s shares began trading publicly under the new ticker symbol DJT.
Last week, the Securities and Exchange Commission charged Trump Media’s auditor with “massive fraud” involving the auditor’s accounting work for hundreds of publicly traded companies and affecting 1,500 filings with the SEC.
The auditor, BF Borgers CPA, and its owner, Benjamin Borgers, agreed to be permanently suspended from practicing accounting before the SEC and to pay a total of $14 million in civil penalties.
Trump Media hired a new auditor, Semple, Marchal & Cooper LLP, last weekend to replace BF Borgers.
This is breaking news. Please check back for updates.
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2024-05-09 18:36:13
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