DJT Stock Alert: 2 Trump SPAC Insiders Just Pled Guilty to Insider Trading
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The bad news just isn’t stopping for Trump Media & Technology Group (NASDAQ:DJT) stock. Two brothers who invested heavily in Digital World Acquisition Corp, the blank-check company that took TMTG public, have been charged with insider trading.
Gerald and Michael Shvartsman opted to change their initial pleas of not guilty following yesterday’s hearing in Manhattan. Each brother now pleads guilty to one count of fraud regarding DWAC stock, specifically, making trades on privileged information and profiting significantly. DJT stock has been trending downward all day as momentum from the news drags the company down.
TMTG hasn’t been a public company for long but its history is already marred with scandals and uncertainty. This doesn’t bode well for DJT stock, as Wall Street hates both uncertainty and legal troubles that suggest leadership problems. As of now, the newly public company’s future looks highly questionable.
What’s Happening With DJT Stock
It’s true that the crimes committed by the Shvartsman brothers happened before DWAC became DJT stock. According to a statement released by the U.S. Attorney’s office, they collected more than $22 million dollars by trading DWAC stock on material, non-public information (MNPI) that centered around the special purpose acquisition company (SPAC)’s pending merger with TMTG. U.S. Attorney Damian Williams addressed this, stating:
“Michael and Gerald Shvartsman admitted in court that they received confidential, inside information about an upcoming merger between DWAC and Trump Media and used that information to make profitable, but illegal, open-market trades. Insider trading is cheating, plain and simple, and today’s convictions should remind anyone who may be tempted to corrupt the integrity of the stock market that it will earn them a ticket to prison.”
A third company insider, Bruce Garelick, is also accused of profiting from these illegal trades. Donald Trump is not currently accused of any illegal activity regarding this case. Nor is anyone else connected to TMTG or Truth Social. But investors shouldn’t be naive and assume that it won’t impact DJT stock. It already is, and this negative momentum is likely to continue. It is casting even more dark shadows of uncertainty over the struggling company.
More Legal Problems
This isn’t the only legal problem facing TMTG. Trump is involved in another lawsuit that is negatively impacting DJT stock. The former president is currently suing two of his Truth Social co-founders in an attempt to dilute their stakes in the company he claims they mismanaged. That news sent shares down yesterday. They haven’t rebounded today, as more questionable legal developments have cast doubt over the company’s future. But even that’s not as worrisome as the going concern warning that TMTG recently issued, raising more questions about its future.
For investors, this news is just another item to add to the list of reasons to approach DJT stock with caution. The company hasn’t been able to regain its early trading momentum since its first day on the Nasdaq. In fact, shares are down more than 33% for the week. For as long as troubling legal headlines keep piling up, the already unstable company is likely to continue its race to the bottom.
On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.