Trump blank cheque firm investor pleads guilty to insider trading
AN EARLY investor in the company that took Donald Trump’s social media business public pleaded guilty yesterday to an insider trading charge.
Gerald Shvartsman pleaded guilty in New York at a hearing before US District Judge Lewis Liman.
Prosecutors charged Mr Shvartsman, his brother and a third man last year with trading on inside information about Trump Media & Technology Group’s plan to be listed on the Nasdaq stock exchange through a merger with a so-called blank-cheque company.
Mr Shvartsman’s brother, Michael Shvartsman, who runs Rocket One Capital in Miami, said in an earlier court filing that he would also change his plea.
The third man is Bruce Garelick, who was a board member of the blankcheque company. The three men were accused of making more than $22m (£17m) trading on inside information.
Blank cheque companies, or special purpose acquisition companies (Spacs), are shell companies that raise money through an initial public offering for the purpose of acquiring existing businesses. They are seen as a faster way for companies to join a stock market than a conventional flotation.
All three men had initially pleaded not guilty and were scheduled to face trial later this month.
Prosecutors said the trio signed con- fidentiality agreements in June 2021 when they were approached to become early investors in Digital World Acquisition, the blank check company. The agreements required them to keep information they learned confidential and not trade the company’s securities in the open market, prosecutors said.
After hearing that the company was in merger talks with Trump Media, the trio, according to prosecutors, tipped others.
They bought Digital World shares, selling them after the deal was announced on Oct 20 2021, to make a total of $22m (£17.4m) in illegal profit.
Trump Media was publicly listed late last month, and its shares have been on a wild ride fuelled by speculators betting on enthusiasm for Mr Trump, the Republican candidate in November’s presidential election.
The stock shed early gains this week after it disclosed it had lost more than $58m in 2023. Trump Media owns Truth Social, the social media platform launched after Mr Trump was banned from Twitter after posts related to the US Capitol riots in January 2021.
Mr Trump was allowed back on to Twitter after it was taken over by Elon Musk the following year.
Trump Media shares were trading at around $50 yesterday, making Mr Trump’s stake worth around $4bn, though he is not allowed to sell or borrow against it for six months. He owns nearly 60pc of the company.