Congress is being asked to investigate what Trump Media & Technology Group CEO Devin Nunes has called the “potential manipulation” of its stock price.
Trump Media had a highly successful debut in March, but since then has taken a severe dip, going from a high of about $79 per share on its first day of trading to $23 last week, according to The Hill.
On Wednesday, Trump Media’s stock price was about $32.
Nunes, a former Republican member of Congress, sent a letter to the chairs of the House Judiciary, Oversight, Financial Services and Ways and Means committees saying something was not right.
The letter, which was filed with the Securities and Exchange Commission, described the stock price swings as “an urgent matter concerning the potential manipulation of the stock of Trump Media & Technology Group Corp.”
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“Since April 2, 2024, DJT has appeared every day 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 wrote.
“Reports indicate that, as of April 3, 2024, DJT was the single most expensive stock to short in U.S. markets by a significant margin, meaning that brokers have a significant financial incentive to lend non-existent shares,” Nunes wrote, noting that four companies make up 60 percent of the shares in Trump Media that have been traded.
“Overall, we assess there are strong indications of unlawful manipulation of DJT stock,” Nunes wrote.
“As such, I respectfully request that you open an investigation of anomalous trading of DJT to determine its extent and purpose, and whether any laws including RICO statutes and tax evasion laws were violated, so that the perpetrators of any illegal activity can be held to account,” he wrote.
Should a congressional investigation be launched?
“Such an inquiry is needed to protect shareholders, including TMTG’s retail investors,” Nunes wrote, noting that an investigation could also show the need for policy changes that include “stiffening penalties for illegal naked short sellers.”
Nunes noted that a December letter from 74 members of Congress suggests that what is happening to Trump Media is not a unique case.
A letter to the CEO of Nasdaq, the exchange where Trump media stock is traded, was also attached to an SEC filing. The letter made similar points to the letter to Congress, noting that Nunes is concerned with “unlawful trading activity.”
Citadel Securities, one company mentioned as a major mover of Trump Media shares, denied doing anything illegal in a statement to CNBC last week.
“Devin Nunes is the proverbial loser who tries to blame ‘naked short selling’ for his falling stock price,” a representative of Citadel Securities said.
“If he [Nunes] worked for Citadel Securities, we would fire him, as ability and integrity are at the center of everything we do,” the representative said.
A representative of Trump Media in turn attacked Citadel Securities.
“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,’” she said.
“Rather than support our common sense efforts to promote transparency and compliance, Citadel Securities bizarrely targeted our CEO with an unhinged attack,” Trump Media said in an SEC filing on Friday.
