CRIME
Florida Brothers Plead Guilty To Insider Trading Ahead Of Trump Media Merger
U.S. Attorney's Office
Two Florida brothers each pleaded guilty on Wednesday to insider trading charges connected to the acquisition of former President Donald Trump’s media company ahead of its initial public offering.
Michael Shvartsman, 53, and Gerald Shvartsman, 46, admitted profiting more than $22 million on trades made in advance of the announcement that Digital World Acquisition Company (DWAC) would acquire Trump Media & Technology Group, which owns the social media platform Truth Social, and intended to take it public, according to a statement from the U.S. Attorney’s Office for the Southern District of New York.
Michael and Gerald Shvartsman admitted in court that they received confidential, inside information about an upcoming merger between DWAC and Trump Media and used that information to make profitable, but illegal, open-market trades, U.S. Attorney Damian Williams said in a statement. Insider trading is cheating, plain and simple, and todays convictions should remind anyone who may be tempted to corrupt the integrity of the stock market that it will earn them a ticket to prison.
The brothers were invited to invest in DWAC and another special purpose acquisition company, or SPAC, and received confidential information after signing non-disclosure agreements, including the fact that Trump Media was an acquisition target. The defendants were prohibited from sharing the confidential information, or using it to make trades on the open market.
After investing in DWAC, the brothers placed an associate on the company’s board of directors and continued to receive confidential information, including details of the planned merger with Trump Media and the timing of the planned announcement.
The brothers then bought millions of dollars of DWAC securities on the open market before the public announcement, and tipped others to the upcoming merger.
The brothers each pleaded guilty to one count of securities fraud, which carries a maximum penalty of 20 years in prison.
TMX contributed to this article.
