Trump Media alerts Nasdaq to potential market manipulation from ‘naked’ short selling of DJT stock

Trump
Media
on
Friday
warned
the
CEO
of
the

Nasdaq
Stock
Market
of ‘potential
market
manipulation’
of
the
company’s
stock
by “naked”

short
selling
of
shares.

The
warning
came
two
days
after
Trump
Media,
which
owns
the

Truth
Social
app,
offered
shareholders
detailed

instructions
on
how
they
can
avoid
lending
their
shares
to
short
sellers,
who
then
execute
trades
betting
that
the
price
of
the
stock
will
fall.

Trump
Media
disclosed
its
warning
to
Nasdaq
CEO
Adena
Friedman
in
a
filing
with
the
Securities
and
Exchange
Commission.

The
price
of
Trump
Media
stock,
ticker
symbol

DJT,
has
rallied
in
recent
days
but,
trading
at
about
$36
per
share
Friday
afternoon,
is
still
sharply
lower
than
the
more
than
$70
per
share
it
debuted
at
on
March
26.

Former
President

Donald
Trump
owns
nearly
60%
of
Trump
Media
shares.
The
paper
value
of
his
stake
has
dropped
by
billions
of
dollars
since
the
stock
began
public
trading
in
March.

Trump
Media
CEO
Devin
Nunes
in
his
letter
to
Friedman
did
not
directly
accuse
anyone
in
particular
of
naked
short
selling,
which
is
the
sale
of
stocks
without
first
having
borrowed
such
stocks
for
that
purpose.

But
Nunes
noted
that
as
of
Wednesday “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,”
Nunes
said.

However,
the

SEC
on
its
website
notes
that
a
failure
to
deliver
shares
as
part
of
a
short
sale
trade,
which
can
land
a
company
on
the
Reg
SHO
threshold
list,
does
not
necessarily
reflect
improper
trading
activity
such
as
naked
short
selling.

“There
are
many
justifiable
reasons
why
broker-dealers
do
not
or
cannot
deliver
securities
on
the
settlement
date,”
the
SEC
notes
in
a
section
about
Regulation
SHO.

But
in
his
letter,
Nunes
pointed
to
circumstantial
evidence,
which
included
Trump
Media
stock
being
in
early
April
the

most
expensive
stock
to
short
in
the
United
States,
which
he
said
would
give
brokers “significant
financial
incentive
to
lend
non-existent
shares.”

The
letter
links
to
a
CNBC
article
detailing
the
sky-high
premiums
brokers
were
charging
short
sellers
for
loans
of
Trump
Media
shares
to
sell.

“I
write
to
bring
your
attention
to
potential
market
manipulation
of
the
stock
of
Trump
Media
&
Technology
Group
Corp.”
Nunes
wrote.

“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,”
he
wrote.

“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,”
Nunes
wrote.

“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,”
Nunes
wrote.

“TMTG
looks
forward
to
assisting
your
efforts.”

A
Nasdaq
spokesperson
told
CNBC, “Nasdaq
is
committed
to
the
principles
of
liquidity,
transparency,
and
integrity
in
all
our
markets.”

“We
have
long
been
an
advocate
of
transparency
in
short
selling
and
have
been
an
active
supporter
of
the
SEC’s
rules
and
enforcement
efforts
designed
to
monitor
and
prohibit
naked
short
selling,”
the
spokesperson
said.

A
spokesperson
for
Citadel
Securities
told
CNBC, “Devin
Nunes
is
the
proverbial
loser
who
tries
to
blame ‘naked
short
selling’
for
his
falling
stock
price.”

“Nunes
is
exactly
the
type
of
person
Donald
Trump
would
have
fired
on
[The]
Apprentice,”
the
spokesperson
said,
referring
to
Trump’s
former
business
competition
reality
TV
show.

“If
he
[Nunes]
worked
for
Citadel
Securities,
we
would
fire
him,
as
ability
and
integrity
are
at
the
center
of
everything
we
do,”
the
spokesperson
said.

A
spokeswoman
for
Trump
Media
in
response
to
that
said, “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.'”

A
spokesman
for


Virtu
Financial,
the
parent
company
of
Virtu
Americas,
declined
to
comment.

G1
Execution
Services
and
Jane
Street
Capital
had
no
immediate
comment
on
Nunes’
letter.

Data
from
FactSet
shows
that
the
short
volume
in
Trump
Media
shares
has
not
significantly
changed
since
April
7,
while
the
stock
price
sharply
dropped
before
seeing
a
pointed
bounce
in
recent
days.

Short
volume
is
the
number
of
tradable
shares
being
sold
short
during
a
specific
period.

The
data
suggests
that
there
was
no
change
in
the
pattern
of
short
selling
that
affected
the
price
of
Trump
Media
shares
during
that
same
time.

Trump,
the
presumptive
Republican
presidential
nominee,
currently
is
on
trial
in
New
York
state
court
on
criminal
charges
related
to
a
2016
hush
money
payment
by
his
then-lawyer
to
the
porn
actor
Stormy
Daniels.

Correction:
This
article
has
been
updated
to
correct
the
spelling
of
Adena
Friedman’s
name.