Three people charged with insider trading related to Trump Media Space

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An architect of a plan to take Donald Trump’s media business public has been charged with insider trading after he allegedly shared information about transactions during a trip to Las Vegas and shielded two of his associates from illegal trading. Helped earn millions of dollars.

Bruce Garelik, who is on the board of directors of Digital World Acquisition Corporation, was arrested Thursday along with brothers Michael Shvartsman and Gerald Shvartsman on criminal charges brought by the US attorney in Manhattan, according to the prosecutor’s office. The Securities and Exchange Commission has also filed a civil claim against the three traders.

DWAC briefly became one of the best-performing companies on the stock market after it announced a merger with Trump Media & Technology Group, accusing the former president’s Truth social media platform of “cancelling culture” and standing up for Big. operates with the mission of being Take”

Shares of the special purpose acquisition company rose from about $10 to $175 after the October 2021 announcement. The planned deal with TMTG has been delayed pending regulatory scrutiny.

According to court papers filed Thursday, Garelik and Shvartsman bought shares in DWAC a few months before the Trump deal was announced and sold them shortly afterward, making huge profits.

Prosecutors allege that Garelik, who was also chief strategy officer at Rocket One Capital, an investment firm run by Michael Shwartsman, briefed the Shwartsman brothers on the progress of DWAC’s merger with TMTG and encouraged them to purchase the warrants. did, which later escalated. worth.

Lawyers for Garelik and Shvartsman did not immediately respond to requests for comment.

The SEC pointed to text messages and emails from Garelik in which he was considering a deal with Trump months before any such transaction was announced.

In June 2021, Garelik sent an email soliciting investment in what he called “(the) Trump Space”.

Garelik told his daughter at the end of that month, “There is every possibility that you may be thrown out.” “Your father may be named to the ‘Trump Media Group’ board of directors.”

In another message, Garelik described her potential seat on the DWAC board of directors as “a front row seat babysitting job” that was “worth it for such an unorthodox investment”.

In an August 2021 filing with the SEC, DWAC told investors that it “had not selected any specific business combination targets”.

“As a board member, Garelik not only had access to information regarding DWAC’s upcoming merger announcement, but also had a duty to maintain the confidentiality of that information,” said Gurbir Grewal, the SEC’s director of enforcement. “Rather than complying with his duty as an insider, we allege that Garelik, in conjunction with Shvartsman, monetized that information to generate more than $20 million in illegal profits.”