April 19 (UPI) — Trump Media on Friday disclosed that it has warned the Nasdaq stock exchange of illegal “naked” short selling of Trump Media & Technology Group shares.
Short selling is a mechanism to make money by betting that a stock’s price will fall.
The short selling “potential market manipulation” of the Trump Media & Technology Group Corp. presents unlawful trading risks to small retail investor buyers of the stock, as well as the company itself.
DJT offered shareholder instructions on how to avoid loaning out DJT shares to short sellers.
The Thursday letter to Nasdaq CEO Adena T. Friedman from Trump Media CEO Devin Nunes said, “Data made available to us indicate that just four market participants have been responsible for over 60% of the extraordinary volume of DJT shares traded: Citadel Securities, VIRTU Americas, G1 Execution Services, and Jane Street Capital.”
The letter added, “As you know, ‘naked’ short selling — selling shares of a stock without first borrowing the shares of stock deemed difficult to locate — is generally illegal pursuant to Securities and Exchange Commission.”
Donald Trump owns nearly 60% of Trump Media shares, which have swung wildly in price, losing billions of dollars since DJT started trading in March.
A Citadel Securities spokesperson told CNBC, “Devin Nunes is the proverbial loser who tries to blame ‘naked short selling‘ for his falling stock price.”
Virtu Financial, G1 Execution Services and Jane Street Capital had no immediate comment on Nune’s warning.
Nunes asked Nasdaq to advise the steps it can take to foster transparency and compliance by ensuring brokers adhere to SEC regulations. Nunes said it’s necessary to prevent “the lending of shares that do not exist.”
Nasdaq said it “is committed to the principles of liquidity, transparency, and integrity in all our markets. We have long been an advocate of transparency in short selling and have been an active supporter of the SEC’s rules and enforcement efforts designed to monitor and prohibit naked short selling.”
Nunes said in the letter that the DJT stock is the most expensive U.S. stock to short, giving a big incentive to naked short sellers looking to illegally manipulate the stock price.
Trump Media stock fell another 14% Tuesday as it announced it would get into streaming. Since going public, DJT’s valuation has dropped by $5 billion.
Some experts have warned against investing in Trump’s media company due to filings that showed it had just $4 million in sales and net losses of nearly $60 million for the full year ending Dec. 31.
