The Trump Media and Technology Group is asking lawmakers to investigate what it claims is “possible manipulation” of its stock, which trades under the symbol DJT, the same initials as former President Donald Trump.
In an April 23 letter, Devin Nunes, CEO of Trump Media and a former Republican congressman from California, asked multiple House committees to “open an investigation into DJT’s unusual dealings.”
The committees asked to investigate are its Financial Services Committee and the Oversight and Reform Committee;
Nunes previously claimed to own stock in the media company Become a target for unscrupulous investors Since its launch at the end of March. Earlier this month, he sought the help of the Nasdaq stock exchange, where DJT trades, to investigate possible “naked” short selling. This practice is prohibited in the United States because it involves short-selling a stock without first borrowing, which can destabilize the price.
“‘Short’ selling often benefits sophisticated market participants at the expense of retail investors,” Nunes wrote in a letter to House Republican committee leaders.
Trump Media’s stock price has fluctuated widely since going public last month. After hitting a high of $79.38 per share on its first day of trading on March 26, the stock fell to $22.55 per share on April 16. The stock recovered its losses, rising $1.38, or 4.2%, to $33.95 in afternoon trading on Wednesday.
What is naked short selling?
Short selling occurs when investors borrow shares that they believe will fall in price and then sell those shares in the market for cash. When the share price falls, traders buy the shares at a lower price and return the shares to the trading firm from which they originally borrowed the shares.
This allows traders to pocket the difference between the borrowed stock price and the selling price. Such transactions are valid. But “bare” short selling avoids the step of traders borrowing shares, meaning investors sell shares they don’t own. They then buy shares to cover their positions.
Bare short selling can cause the target company’s stock price to drop significantly and market confidence to weaken. According to the law firm of Kohn, Kohn & Colapinto.
Wall Street Trading Firm
Nunes also noted that “the data we received” showed that four companies accounted for 60% of the “unusual amount of DJT stock trading volume.”
These companies include well-known Wall Street firms such as market-making firm Citadel Securities and Jane Street Capital, founded by billionaire Ken Griffin.
Neither Citadel nor Jane Street responded to requests for comment, nor did VIRTU Americas and G1 Execution Services, two other companies mentioned by Nunes.
Trump Media’s main asset is the social media platform Truth Social, which has been compared to “Mem” stock such as Game Station. These stocks often attract individual investors based on social media buzz, rather than the business fundamentals that institutional investors rely on, such as profitability and revenue growth.
Nunes wrote to lawmakers that he believes an investigation into the bare-bones short sale of DJT stock is “necessary to protect TMTG’s shareholders, including retail investors.”
He added that “it may also signal the need for policy changes” such as requiring brokers to better record their efforts to find and borrow stocks and stiffen penalties for illegal bare-short sellers.
Amy Peach
Aimee Picchi is a deputy managing editor at CBS MoneyWatch, covering business and personal finance. He previously worked at Bloomberg News and has written for national news outlets including USA Today and Consumer Reports.
