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Trump Media asks lawmakers to investigate possible ‘illegal trading activity’ on its DJT shares

Trump Media & Technology Group is asking lawmakers to investigate what it claims is “potential manipulation” of its shares, which trade under the ticker symbol DJT — the same as former President Donald Trump’s initials.

In an April 23 letter, Devin Nunes, CEO of Trump Media and former Republican congressman from California, asked multiple House committees to open an investigation into DJT’s abnormal trading.

The committees charged by Nunes with examining the issue are the House Committee on the Judiciary; its Financial Services Committee; its Ways and Means Committee; and the Oversight and Reform Committee.

Nunes has previously claimed that the media company’s actions have been targeted by unscrupulous investors since it was made public in late March. Earlier this month, it asked the Nasdaq exchange, where DJT trades, to help it investigate possible incidents of “naked” short selling. The practice is banned in the United States because it involves selling a stock short without first borrowing the shares, which can destabilize prices.

“‘(N)aked’ short selling often involves sophisticated market participants profiting at the expense of retail investors,” Nunes wrote in his letter to House Republican committee leaders.

Trump Media shares have fluctuated wildly since their IPO last month. After hitting a high of $79.38 per share on March 26, its first day of trading, the stock plunged as low as $22.55 per share on April 16. Shares have since regained some ground, rising $1.38, or 4.2%, to $33.95 on Wednesday. afternoon discussions.

What is naked short selling?

Short selling occurs when investors borrow shares of a stock that they believe will decline in price, then sell those holdings in the market for cash proceeds. If the stock price falls, the trader then buys the shares at the lowest price and returns the shares to the trading company from which they originally borrowed the shares.

This allows traders to pocket the difference between the borrowed stock price and the selling price. Such trading is legal. But “naked” short selling skips the step where the trader borrows shares, meaning the investor sells shares he or she does not own. Later, they buy the shares to hedge their position.

According to the law firm Kohn, Kohn & Colapinto, a naked short sale can cause a significant decline in a target company’s stock price and can also undermine market confidence.

Wall Street trading companies

Nunes also cited “data available to us” which he said shows that four companies are responsible for 60% of the “extraordinary volume of DJT shares traded.”

The companies include well-known Wall Street firms such as Citadel Securities, a market-making firm founded by billionaire Ken Griffin, and Jane Street Capital.

Neither Citadel nor Jane Street responded to requests for comment, nor did the two other companies cited by Nunes, VIRTU Americas and G1 Execution Services.

Trump Media, whose main asset is the social media platform Truth Social, has drawn comparisons to “meme” actions like GameStop. These stocks typically attract individual investors based on social media buzz, rather than the company fundamentals that institutional investors rely on, such as profitability and revenue growth.

Nunes wrote to lawmakers that he believes an investigation into the short selling of DJT stock is “necessary to protect shareholders, including retail investors in TMTG.”

He added: “It could also highlight the need for policy changes,” such as: requiring brokers to better document their efforts to locate and borrow stocks, and toughening penalties for illegal short sellers.

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