Trump Media SPAC Deal: Accused Insider Traders Plead Not Guilty

On Thursday, three individuals accused of insider trading prior to the proposed merger of a blank check company with former U.S. President Donald Trump‘s social media company pleaded not guilty in a New York court.

What Happened: Florida venture capitalist Michael Shvartsman, his brother Gerald Shvartsman, and Bruce Garelick, an employee, were charged last month with trading illegally in Digital World Acquisition Corp DWAC, a special purpose acquisition company, before it announced its plan to combine with Trump Media & Technology Group in late 2021, Reuters reports. The merger, which would take Trump Media public, has yet to occur.

Authorities said Garelick, who was also a Digital World director, provided the Shvartsmans with what he called “intelligence” about merger talks.

The defendants then allegedly began buying Digital World securities and passed tips to others, prosecutors said, noting that they sold their holdings within two days after the Oct. 20, 2021, merger announcement caused Digital World’s share price to more than quadruple.

See Also: 7 Key Takeaways From The Donald Trump SPAC Deal

Why It Matters: The trial has been scheduled for March 18, 2024. Trump and his company are reportedly not accused of any wrongdoing.

In a related civil lawsuit, the Securities and Exchange Commission disclosed that the sales of securities by the three resulted in an illegal gain of nearly $18.3 million for Michael Shvartsman, $4.6 million for Gerald Shvartsman and $50,000 for Garelick.

The proposed merger between Trump Media & Technology Group and Digital World Acquisition Corp has seen several delays in its approval and merger vote date since it was announced.

If the merger closes, Trump Media would gain access to more than $1 billion in cash from Digital World’s institutional investors, such as hedge funds.

As previously detailed, Trump Media runs a social network dubbed “TRUTH Social,” which aims to rival the ‘Big Tech’ companies of Silicon Valley.

Price Action: On Thursday, Digital World shares shot up 19.1% higher in the after-hours session to $15.91 after closing 2.05% lower at $13.36 in regular trading, according to data from Benzinga Pro.

Read Next: Trump Jr. Sees End Of Civilization If His Father Is Indicted For Jan. 6 Capitol Riots: ‘We Are In Serious Trouble’