Three individuals involved with the blank-check firm working on taking former President Donald Trump’s media company public have been charged with insider trading, according to federal prosecutors. Bruce Garelick, Gerald Shvartsman, and Michael Shvartsman were arrested in South Florida and face multiple counts of securities fraud. The Securities and Exchange Commission (SEC) has also filed a lawsuit against the men. They allegedly made illegal trades after receiving inside information that the firm, Digital World Acquisition, planned to merge with Trump Media & Technology Group, the owner of Trump’s social network, Truth Social. The stock price jumped after the announcement, allowing the men to sell their shares at a significant profit. However, the merger has been put on hold due to ongoing federal investigations. Trump and Trump Media are not named in the indictment. The charges may further complicate Digital World’s merger plans with Trump Media, as the proposed merger has already faced delays due to an SEC investigation. In its lawsuit, the SEC suggests that it is also examining other irregularities in the merger. The SEC alleges that Garelick and the Shvartsman brothers were informed of the merger plans by Digital World’s former CEO and chairman, Patrick Orlando, before filing for an initial public offering. The men are accused of buying large stakes in Digital World based on this insider information and selling all their shares once the Trump Media merger was announced. The men shared this information with others, including friends and neighbors. Garelick resigned from the board in 2022 after other directors received subpoenas related to the merger deal. Trump and congressional Republicans have accused the SEC of political bias and stalling the merger. Digital World may be required to liquidate and return $300 million to investors if the merger is not finalized by September 8th. The SEC and the U.S. attorney’s office continue to investigate the matter.
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