Trump Media pushes House to probe 8 firms over short-selling of DJT shares

The
CEO
of


Trump
Media
urged
leading
House
committee
chairmen
to

investigate
eight
financial
firms
over
concerns
of
potentially
illicit

short
selling
of

DJT,
whose

majority
shareholder
is
former
President

Donald
Trump.

“I
believe
quick
action
is
necessary
to
protect
retail
shareholders,
identify
wrongdoers,
and
determine
whether
any
laws
including
[Racketeer
Influenced
and
Corrupt
Organizations
Act]
statutes
and
tax
evasion
laws
have
been
violated,”
wrote
CEO

Devin
Nunes,
who
on
April
24
first
asked
top
House
Republicans
to
probe

short
selling
of
Trump
Media

stock.

Nunes,
in
a
letter
dated
Wednesday,
wrote
that
the
committees
should
seek
documents
and
testimony
from
the
eight
firms
that
he
named:
Apex
Clearing,
Clear
Street,
Cobra
Trading,
Cowen
and
Company,
Curvature
Securities,
StoneX
Securities,
TradePro
and
Velocity
Clearing.

A
spokesperson
for
Clear
Street
declined
to
comment
on
Nunes’
letter.
CNBC
has
requested
comment
from
the
other
companies
named
in
the
letter.

Nunes’
new
letter
escalates
his

efforts
to
thwart
short
selling
of
the

Truth
Social
app
owner’s
shares
by
encouraging
shareholders
to
block
their
stock
from
being
used
for
such
trades,
and
by
asking
the

Nasdaq
Stock
Market
and
the
House
to
probe
potentially
illegal
“naked”
short
selling.

Naked
short
sellers,
unlike
conventional
short
sellers,
do
not
first
borrow
a
company’s
stock
to
sell
for
such
trades,
which
act
as
bets
that
the
share
price
will
fall.

Nunes
has
suggested
that
the
sharp
fall
of
Trump
Media’s
share
price
since
the
stock
began
public
trading
on
March
26
is
the
result
of
naked
short
sales,
not
a
belief
that
the
company’s
meager
revenue
of
just
$4.1
million
last
year
does
not
come
close
to
justifying
a
market
capitalization
of
more
than
$6
billion.

DJT
shares
were
trading
6%
higher
early
Thursday
at
$47.84
per
share,
which
is
32%
lower
than
its
opening
price
on
March
26.

Much
of
Donald
Trump’s
net
worth
is
tied
up
in
his
65%
stake
in
Trump
Media,
but
he
is
currently
barred
from
selling
the
shares
that
are
now
worth
more
than
$5
billion
until
September
due
to
a
provision
in
the
merger
with
a
shell
company
that
took
the
firm
public.

Trump,
who
is
the
presumptive
Republican
presidential
nominee,
faces
pending
civil
legal
judgments
of
more
than
$500
million.

“Based
on
factors
including
the
volume
and
price
of
purportedly
available ‘locates,’
[Trump
Media]
has
identified
ongoing
anomalies
in
DJT
trading,”
Nunes
wrote
the
House
Judiciary,
Ways
and
Means,
Financial
Services,
and
Oversight
and
Reform
chairmen
in
his
new
letter.

“To
assist
in
determining
whether
intra-day
short
sales
of
DJT
are
being
approved
in
violation
of
[Securities
and
Exchange
Commission]
rules,
we
would
encourage
you
to
seek
documents
and
testimony
from
firms
(including
several
Depository
Trust
Company
members)
that
facilitate
short
sales,”
Nunes
wrote
in
the
letter,
which
was
disclosed
Thursday
by
Trump
Media
in
an
SEC
filing.

“In
addition
to
asking
for
records
and
information
regarding
trading
in
DJT,
relevant
documents
include
compliance
policies
—
including
any
policies
that
condone
the
application
of
a ‘multiplier’
to
facilitate
the
lending
of
more
shares
than
are
actually
available,”
wrote
Nunes,
who
is
a
former
Republican
congressman
from
California.

Nunes,
in
the
letter,
cited
the
fact
that
DJT
has
continuously
remained
on
Nasdaq’s
Reg
SHO
Threshold
List
since
April
2,
2024.

“An
appearance
on
the
threshold
list
results
from
persistent
settlement
failures,
and
triggers
…
heightened
responsibilities
for
market
participants,”
he
wrote. “For
threshold
securities
such
as
DJT,
SEC
guidance
clearly
states
that
the
only
way
to
establish ‘reasonable
grounds’
for
short
sales
is
if
the
broker-dealer
pre-borrows
the
securities;
moreover, ‘a
broker-dealer
may
not
re-apply
a
locate
for
intra-day
buy
to
cover
trades.'”

But
the
SEC’s
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
website
says
about
Regulation
SHO.

CNBC
has
requested
comment
from
the
House
committee
chairmen
about
Nunes’
letter.

In
a
letter
last
month
to
Nasdaq’s
CEO
about
potential
market
manipulation
of
Trump
Media
shares
by
naked
short
selling,
Nunes
named
four
market-making
companies
as
being
responsible
for
more
than
60% “of
the
extraordinary
volume
of
DJT
shares
trade.”

Nunes
did
not
accuse
those
four
companies
of
wrongdoing.
But
his
use
of
their
names
drew
a
blistering
reply
from
one
of
them:
Citadel
Securities,
whose
founder

Ken
Griffin
is
a
major
Republican
donor.

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

“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.”

A
spokeswoman
for
Trump
Media
in
response
to
that
at
the
time
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.’ “

–
Additional
reporting
by
CNBC’s



Kevin
Breuninger