Trump Media Warns Of ‘Potential Market Manipulation’

Trump Media on Friday warned the chief executive of the Nasdaq exchange of “potential market manipulation” of the company’s stock by so-called “naked” short sellers.

The warning came after shares in the company, which operates Trump’s Truth Social social media platform, sagged from more than $70 (£56) on their stock market debut on 26 March to as low as around $22 in recent days.

Two days earlier Trump Media provided detailed instructions to stockholders on how to avoid lending their shares to short sellers, who execute trades betting the stock’s price will fall.

The company disclosed its warning to Nasdaq chief executive Adena Friedman in a filing with the Securities and Exchange Commission.

Image credit: TMTG

Volatile stock

Trump Media shares, which have been highly volatile along with those of the shell company that it merged with for the Nasdaq debut, rose just over 3 percent on Friday on news of the filing.

The company’s chief executive, Devin Nunes, told Friedman in his letter that the stock, which trades under the ticker symbol DJT, “appears on Nasdaq’s ‘Reg SHO threshold list’, which is indicative of unlawful trading activity”.

“This is particularly troubling given that ‘naked’ short selling often entails sophisticated market participants profiting at the expense of retail investors,” Nunes wrote.

“Naked” short selling involves short-selling stocks without first borrowing the stocks for that purpose.

‘Naked’ short selling

The Nasdaq list comprises securities that have failed to clear for five consecutive settlement days, which could be indicative of “naked” short selling but also of issues such as administrative or technical problems.

“There are many justifiable reasons why broker-dealers do not or cannot deliver securities on the settlement date,” the SEC says on its website.

Nunes said four market participants were responsible for more than 60 percent of the

“Data made available to us indicate that just four market participants have been responsible for over 60 percent of the extraordinary volume of DJT shares traded: Citadel Securities, VIRTU Americas, G1 Execution Services, and Jane Street Capital,” Nunes wrote.

‘Integrity’

“In light of the foregoing, and Nasdaq’s obligation and commitment to protect the interests of retail investors, please advise what steps you can take to foster transparency and compliance,” he wrote.

Nasdaq said in a statement: “Nasdaq is committed to the principles of liquidity, transparency, and integrity in all our markets.”

A spokesman for Citadel Securities told Silicon UK: “Devin Nunes is the proverbial loser who tries to blame ‘naked short selling’ for his falling stock price.”

The company said “integrity” is central to its operations.

Matthew Broersma

Matt Broersma is a long standing tech freelance, who has worked for Ziff-Davis, ZDnet and other leading publications

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