Trume Media & Technology Group CEO Devin Nunes alleges market manipulation of the company’s volatile stock in a letter to Nasdaq Chair Adena Friedman. The letter states:
“As you know, ‘naked’ short selling—selling shares of a stock without first borrowing the shares of stock deemed difficult to locate — is generally illegal pursuant to Securities and Exchange Commission (“SEC”) Regulation SHO. As of April 17, 2024, DJT appears on Nasdaq’s ‘Reg SHO threshold list,’ which is indicative of unlawful trading activity. This is particularly troubling given that ‘naked’” ‘ short selling often entails sophisticated market participants profiting at the expense of retail investors.
“Reports indicate that, as of April 3, 2024, DJT was ‘by far the most expensive U.S. stock to short,’ meaning that brokers have a significant financial incentive to lend non-existent shares. Data made available to us indicate that just four market participants have been responsible for over 60% of the extraordinary volume of DJT shares traded: Citadel Securities, VIRTU Americas, G1 Execution Services, and Jane Street Capital.
“In light of the foregoing, and Nasdaq’s obligation and commitment to protect the interests of retail investors, please advise what steps you can take to foster transparency and compliance by ensuring market makers are adhering to Reg SHO, requiring brokers to disclose their ‘Net Short’ positions, and preventing the lending of shares that do not exist.”
Citadel Securities fired back almost immediately:
“Devin Nunes is the proverbial loser who tries to blame ‘naked short selling’ for his falling stock price,” said a spokesperson for Citadel Securities, underscoring the sharp fall of Trump Media since it began public trading with the DJT ticker in late March.
The stock was down 55% on Friday from its market debut on the Nasdaq.
Trump Media then responded to Citadel in a statement made to news outlets and filed with the SEC:
“Rather than support our common sense efforts to promote transparency and compliance, Citadel Securities bizarrely targeted our CEO with an unhinged attack. Here’s our response:
‘Citadel Securities, a corporate behemoth that has been fined and censured for an incredibly wide range of offenses including issues related to naked short selling, and is world famous for screwing over everyday retail investors at the behest of other corporations, is the last company on earth that should lecture anyone on ‘integrity.’’’
Nunes, a former congressman from California, joined Trump’s media company in 2022, soon after its formation. The company went public through a merger with blank-check firm Digital World Acquisition, following 2 1/2 years of federal investigations, charges of insider trading brought against three investors in the SPAC and an $18 million fined levied by the SEC against Digital World for misleading investors. Meanwhile, Trump and two co-founders of the company have filed suit against each other in a dispute over ownership stakes. Read more.
