The CEO of former President Donald Trump’s media and technology company asked Congress to investigate allegations that the company’s stock is being manipulated by traders who are betting on its downfall.
Devin Nunes, CEO of Trump Media & Technology Group and a former Republican congressman, is urging top Republican lawmakers in the House to open an investigation into “anomalous trading” and possibly “unlawful manipulation” of the firm’s stock. The company, which uses the DJT stock ticker and operates Truth Social, made its debut on the Nasdaq last month.
“There are strong indications of unlawful manipulation of DJT stock,” Mr. Nunes wrote in his letter, which was disclosed Wednesday in a regulatory filing. The letter was sent to House Ways and Means Chair Jason Smith (R-Mo.), Oversight and Reform Chair James Comer (R-Ky.), Financial Services Chair Patrick McHenry (R-N.C.), and Judiciary Chair Jim Jordan (R-Ohio).
The tech CEO asserted concerns about “naked” short selling of the company’s stock, meaning that traders sell shares of a company without borrowing them first. The practice is illegal, and Nasdaq and other stock exchanges are mandated to post lists of stocks that have high failure rates.
Mr. Nunes added that the company has become the “single most expensive stock to short in U.S. markets” as of early April, arguing that traders now “have a significant financial incentive to lend non-existent shares” of the stock.
“This is particularly troubling given that ‘naked’ short selling often entails sophisticated market participants profiting at the expense of retail investors,” Mr. Nunes wrote.
The letter to the GOP chairmen comes as the Trump Media stock price has been involved in volatile trading sessions and is currently trending downward. When it made its debut on March 26, DJT shot up to about $80 per share, but has since dropped by about half.
His letter also alleged that four companies are responsible for more than 60 percent of “the extraordinary volume of DJT shares traded.” One of those firms is Citadel Securities, owned by billionaire Ken Griffin, which responded to an earlier Nunes letter that targeted the company.
“Devin Nunes is the proverbial loser who tries to blame ‘naked short selling’ for his falling stock price,” a Citadel Securities spokesperson said in a statement to CNBC several days ago. The company has not responded to Mr. Nunes’ latest concerns.
That response drew pushback from Trump Media in its own statement: “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,'” the company said.
In the latest letter, Mr. Nunes asked House lawmakers to investigate the alleged unusual activity around Trump Media’s stock and if “any laws including Racketeer Influenced and Corrupt Organizations Act (RICO) statutes and tax evasion laws were violated, so that the perpetrators of any illegal activity can be held to account.” They should also conduct an investigation and obtain trading data from the Securities and Exchange Commission’s database, he added.
It comes as President Trump is set to secure on Tuesday a stock bonus worth $1.3 billion from the firm, equivalent to about half the majority stake he already owns in it, thanks to the wild rally in its shares. The award will take the former president’s overall stake in the company to $4.1 billion.
Following the reports, a Trump Media spokesperson told Reuters that “with more than $200 million in the bank and zero debt, Trump Media is fulfilling all its obligations related to the merger and rapidly moving forward with its business plan.”
While the ex-president has agreed not to sell any of his company’s shares before September, the windfall represents a significant boost to his wealth, which Forbes pegs at $4.7 billion. Unlike much of his real estate empire, shares are easy to divest in the stock market and could come in handy as President Trump’s legal fees and fines pile up, including a $454.2 million judgment in his New York civil fraud case he is appealing.
Meanwhile, the former president is currently on trial in a criminal case that accuses him of falsifying business records during the 2016 election, to which he has pleaded not guilty. If convicted by a Manhattan jury, the former president will likely appeal that case, too.
