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CEO Trump Media Urges House Major Committee Chairs Survey of eight financial companies There are concerns that DJT, whose majority shareholder is former President Donald Trump, may be illegally shorted.
Chief Executive Devin Nunes, who first raised the inquiry on April 24, wrote: “I believe that swift action must be taken to protect retail shareholders, identify wrongdoers, and determine whether there have been violations of the Fraud Act.” Regulations such as the Influenced and Corrupt Organizations Act and tax evasion laws.
Nunes wrote in a letter Wednesday that the committee should seek documents and testimony from the eight companies he named: Apex Clearing, Clear Street, Cobra Trading, Cowen and Company, Curvature Securities, StoneX Securities, TradePro and Velocity Clearing .
A spokesman for Clear Street declined to comment on Nunes’ letter. CNBC has requested comment from the other companies named in the letter.
Nunez’s new letter upgrades his try to stop By encouraging shareholders to prevent their shares from being used for such trading and requiring shareholders to short-sell the shares of the owner of the Truth Social app Nasdaq stock market and House investigation into potential illegal conduct. “Naked” Short Selling.
Unlike traditional short sellers, naked short sellers do not first borrow a company’s stock to make such a trade, which is a bet that the stock price will fall.
Nunes said the sharp decline in Trump Media’s stock price since the stock began trading publicly on March 26 was the result of naked short selling, rather than a belief that the company’s meager revenue of just $4.1 million last year was not enough to justify it. .
Earlier Thursday, DJT shares rose 6% to $47.84 per share, 32% below its March 26 opening price.
The majority of Donald Trump’s net worth is tied to his 65% stake in Trump Media, but he is currently prohibited from selling until September due to a provision in his merger with a shell company that is currently worth more than $500 million. billion dollar stock.
Trump, the Republican presidential candidate, faces more than $500 million in pending civil legal judgments.
“Based on factors such as the number and price of available ‘locations,'[Trump Media]has discovered the persistence of DJT trading,” Nunes, chairman of the House Judiciary, Ways and Means, Financial Services, and Oversight and Reform committees, wrote in a new report. Anomalies.
“To help determine whether DJT’s approval of intraday short sales violated (Securities and Exchange Commission) rules, we encourage you to seek documentation and testimony from the firms that facilitated the short sales, including several depositary trust company members,” Nunes wrote in the letter wrote that Trump Media disclosed the letter in an SEC filing on Thursday.
“In addition to requesting records and information regarding DJT transactions, the relevant documents include compliance policies, including any policy condoning the application of ‘multipliers’ to facilitate the lending of more shares than are actually available,” wrote Nunes, a former California-based ex-citizen from California. Republican congressman.
Nunes mentioned in the letter that DJT has remained on the Nasdaq SHO regulatory threshold list since April 2, 2024.
“Appearance on the threshold list results from continued settlement failures and triggers… greater liability for market participants,” he wrote. “For threshold securities such as DJT, the SEC guidance clearly states that there is a need to establish ‘reasonable justification’ for short selling. The only way to do this is for the broker-dealer to pre-borrow the securities; furthermore, “the broker-dealer may not reapply to find intraday buys to cover the trade.”
But the SEC website notes that failure to deliver shares as part of a short-selling transaction may put the company on the Reg SHO threshold list, but this does not necessarily reflect improper trading activities such as naked short selling.
“There are many reasons why a broker-dealer does not or cannot deliver securities on settlement date,” the website said of the SHO regulations.
CNBC has asked House committee chairs to comment on Nunes’ letter.
Last month, Nunes raised the possibility of market manipulation through naked short selling of Trump Media stocks in a letter to the CEO of Nasdaq. Nunes noted that four market-making firms were trading on DJT Responsible for more than 60% of “excess trading volume” of stock trading volume.
Nunes did not accuse the four companies of wrongdoing. But his use of their names prompted a strong response from one of them: Citadel Securities, whose founder Ken Griffin is a major Republican donor.
“Devin Nunes is a known loser who has attempted to blame his stock price decline on ‘naked short selling,'” a Citadel Securities spokesperson told CNBC at the time.
“Nunez is exactly the person Donald Trump would take a shot at on ‘The Apprentice,'” the spokesman said, referring to Trump’s previous business competition reality show. “If he (Nunez) worked at Citadel Securities, we would fire him because competence and integrity are at the core of everything we do.”
A Trump Media spokeswoman responded at the time, “Citadel Securities is a corporate giant that has been fined and reprimanded for an extremely wide range of criminal conduct, including issues related to naked short selling. And has a reputation for screwing up every day. “Retail investors, at the behest of other companies, are the last companies on earth that should educate anyone on “integrity.” “
-Additional reporting by CNBC Kevin Breuninger
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