Two plead guilty to insider trading related to Trump Media merger

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Two men pleaded guilty on Wednesday to insider trading in securities in the company that ultimately took former U.S.

President Donald Trump’s media business public. Michael Shvartsman, 53, head of Miami-based venture capital firm Rocket One Capital, and his brother Gerald Shvartsman, 46, each pleaded guilty to one count of securities fraud before U.S. District Judge Lewis Liman in Manhattan. Rocket One’s chief investment officer, Bruce Garelick, is scheduled to face trial on related charges on April 29.

operates Truth Social, Trump’s main social media platform. Prosecutors said the trio signed confidentiality agreements in June 2021 when they were approached to become early investors in Digital World Acquisition, the blank-check company. The agreements required them to keep information they learned confidential and not trade the company’s securities in the open market, prosecutors said.

, prosecutors said the trio tipped others and bought Digital World securities, selling them after the deal was announced on Oct. 20, 2021, to make a total of $22 million in illegal profit. Michael and Gerald Shvartsman said in court that they knew what they were doing was wrong when they traded on nonpublic information. “I’ve made a terrible mistake,” Gerald Shvartsman said at the hearing. “Insider trading is cheating, plain and simple,” U.S.

was publicly listed in late March, and its shares have been on a wild ride fueled by speculators betting on enthusiasm for Trump, the Republican presidential candidate in November’s election. The stock shed early gains this week as Truth Social’s parent company disclosed it had lost more than $58 million in 2023.

shares were trading at around $51.60 on Wednesday morning, making Trump’s stake worth about $4 billion, though he is not allowed to sell or borrow against it for six months. Trump Media is also embroiled in legal battles in Delaware and Florida with co-founders Wesley Moss and Andrew Litinsky, who have accused the company of trying to improperly dilute their stake. Trump Media has argued they failed to earn their shares and seeks to strip them of their ownership.

 

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