Trump Media investor convicted of insider trading ahead of merger

A
federal
jury
in
New
York
on
Thursday
convicted
an
investor
of

insider
trading
in
the
stock
of
a
shell
company
ahead
of
its
announcement
in
October
2021
that
it
would
merge
with


Trump
Media.

The
investor,

Bruce
Garelick,
had
been
on
the
board
of
directors
of
the
publicly
traded
company,

Digital
World
Acquisition
Corp.,
at
the
time
he
was
accused
of
sharing
and
exploiting
non–public
information
with
others
about
its
plans
to
merge
with
then-privately
held
Trump
Media,
the
owner
of
the
Truth
Social
app.

Trump
Media’s
majority
shareholder
is
former
President

Donald
Trump,
who
was
not
accused
of
any
wrongdoing
in
the
case
against
Garelick
in
U.S.
District
Court
in
Manhattan.

But
Garelick’s
trial,
which
began
on
April
30,
took
place
just
blocks
away
from
where
Trump
is
on
trial
in
Manhattan
Supreme
Court
on
criminal
charges
related
to
a
hush
money
payment
to
porn
star
Stormy
Daniels.

Two
co-defendants
of
Garelick,
the
brothers
Michael
and
Gerald
Shvartsman,
pleaded
guilty
to
insider
trading
charges
on
April
3.

Jurors
in
Garelick’s
case
began
deliberating
on
Wednesday
afternoon
after
hearing
closing
arguments
from
prosecutors
and
a
defense
lawyer.
After
several
hours
of
deliberation
Thursday,
jurors
returned
guilty
verdicts
on
the
five
counts
of
securities
fraud
and
conspiracy
that
the
54-year-old
Garelick
faced.

Garelick,
who
testified
at
his
trial,
is
scheduled
to
be
sentenced
on
Sept.
12.

Garelick
was
an
investment
advisor
to
Michael
Shvartsman’s
venture
capital
firm,
Rocket
One
Capital.
Prosecutors
said
Garelick
shared
non-public
material
information
about
DWAC’s
merger
plans
with
Trump
Media
with
the
Shvartsman
brothers
in
2021
after
joining
DWAC’s
board.

All
three
men
then
bought
up
DWAC
stock
based
on
that
non-public
information
and
then
sold
their
shares
after
the
price
soared
following
the
announcement
of
the
deal
to
combine
with
Trump
Media,
prosecutors
said.

Garelick
made
a
profit
of
just
$49,000
on
the
illicit
trades,
but
the
Shvartsmans
earned
a
whopping
$23
million,
according
to
prosecutors.

“Bruce
Garelick
was
part
of
a
sophisticated
group
of
individuals
invited
to
invest
in Digital
World
Acquisition
Corporation
…,
a
special
purpose
acquisition
company
that
had
raised
funds
with
the
intention
of
later
investing
in
a
target
company,
Trump
Media
&
Technology
Group,
not
yet
known
to
the
public,”
said
Manhattan
U.S.
Attorney
Damian
Williams
in
a
statement
Thursday.

“When
he
was
given
that
opportunity,
Garelick
promised
to
keep
the
information
about
DWAC’s
interest
in
acquiring
Trump
Media
secret
and
not
use
it
to
trade
in
the
stock
market. 
Garelick
was
also
given
a
seat
on
DWAC’s
board,
which
gave
him
direct
access
to
additional
non-public
information
regarding
the
acquisition,”
Williams
said.

“As
a
unanimous
jury
has
just
found,
Garelick
blatantly
violated
the
law
by
using
the
information
that
he
obtained
as
an
insider
at
DWAC
to
trade
and
tip
others,”
the
top
prosecutor
said. “Garelick’s
federal
conviction
is
yet
another
stark
reminder
that
insider
trading
is
always
a
losing
bet.”

DWAC
and
Trump
Media
completed
their
merger
in
late
March.
Public
trading
of
the
company’s
stock
under
the
new
ticker
DJT
began
a
day
later.

Last
week,
the

Securities
and
Exchange
Commission
charged
Trump
Media’s
auditor
with
what
the
regulator
said
was
“massive
fraud”
involving
the
auditor’s
accounting
work
for
hundreds
of
publicly
traded
companies,
affecting
1,500
SEC
filings.

The
auditor,

BF
Borgers
CPA,
and
its
owner,
Benjamin
Borgers,
agreed
to
be
permanently
suspended
from
practicing
as
accountants
before
the
SEC,
and
to
pay
a
combined
$14
million
in
civil
penalties.

Trump
Media

hired
a
new
auditor,

Semple,
Marchal
&
Cooper
LLP
last
weekend
to
replace
BF
Borgers.

This
is
breaking
news.
Please
check
back
for
updates.