The high-profile insider trading trial linked to Trump Media & Technology Group Corp DJT began in New York this Tuesday. The defendant is charged with unlawful trading in the shares of a shell company before its merger with Trump Media was announced.
What Happened: The federal criminal trial is against Bruce Garelick who is accused of insider trading, CNBC reported. The first witness in the case was Andy Litinsky, a co-founder of Trump Media. Litinsky is also embroiled in complex civil litigation against former president Donald Trump over share ownership in Trump’s social media company.
It is alleged that Garelick shared non-public material information about the merger plans by the shell company, Digital World Acquisition Corp., with his boss, Florida venture capitalist Michael Shvartsman and Gerald Shvartsman, in 2021. All three men were accused of buying up DWAC stock ahead of the merger announcement based on non-public information, then selling the shares after the price soared on the heels of an announcement of the deal with Trump in October 2021.
However, Garelick’s lawyer Jonathan Bach maintains his client’s innocence, stating that Garelick did not engage in insider trading or commit any crime. He also argued that Garelick followed the rules and did not share any information about what he learned as a board member at DWAC.
Assistant U.S. Attorney Matthew Shahabian then called Litinsky to the witness stand. In his testimony, Litinsky detailed the events that led up to Trump Media’s merger agreement with DWAC. He also revealed how capricious and demanding Trump could be in the months leading up to the agreement.
Despite the ongoing trial, the defense attorney sought to draw a distinction between Garelick, who lived and worked remotely in Providence, Rhode Island, in 2021 and Michael Shvartsman, who lived and worked in the Miami area. Bach argued that Garelick “acted in good faith at all times.”
Why It Matters: The Shvartsman brothers admitted to their involvement in a $22 million insider trading scheme linked to Trump Media & Technology Group. The brothers pleaded guilty to a single count of securities fraud in federal court.
Furthermore, Trump Media has been embroiled in a legal dispute with its co-founders over the valuation of their stake in the company and dilution. The co-founders are challenging the timing to wait to sell company shares.
Price Action: On Tuesday, DJT closed at $49.93, marking a 6.94% increase since its previous close, according to Benzinga Pro.
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