An investor named Bruce Garelick was recently convicted of insider trading in the stock of Digital World Acquisition Corp., a shell company that was set to merge with Trump Media in October 2021. Garelick, who had served on the board of directors of Digital World Acquisition Corp., was accused of sharing non-public information about the merger with others. This information was later exploited as Garelick and his associates bought up shares of Digital World Acquisition Corp. and profited from the subsequent increase in stock price following the announcement of the merger with Trump Media.
Legal Proceedings
The trial against Bruce Garelick took place in the U.S. District Court in Manhattan, just blocks away from where former President Donald Trump was facing separate criminal charges in Manhattan Supreme Court. Garelick’s co-defendants, Michael and Gerald Shvartsman, had already pleaded guilty to insider trading charges. During the trial, jurors heard testimonies from prosecutors, defense lawyers, and Garelick himself. After hours of deliberation, the jury returned guilty verdicts on all counts of securities fraud and conspiracy that Garelick faced. He is scheduled to be sentenced on Sept. 12.
While Bruce Garelick only made a modest profit of $49,000 from the illicit trades, the Shvartsman brothers earned a staggering $23 million. Manhattan U.S. Attorney Damian Williams condemned Garelick’s actions, stating that he had violated the law by using non-public information obtained as an insider at Digital World Acquisition Corp. for personal gain. The case serves as a stark reminder that insider trading is illegal and will not go unpunished.
Digital World Acquisition Corp. and Trump Media successfully completed their merger in late March, with public trading under the new ticker DJT commencing shortly after. However, Trump Media’s auditor, BF Borgers CPA, was charged by the Securities and Exchange Commission for “massive fraud” related to its accounting work for numerous publicly traded companies. The auditor and its owner, Benjamin Borgers, agreed to be permanently suspended from practicing as accountants before the SEC and to pay a combined $14 million in civil penalties. Trump Media subsequently hired a new auditor, Semple, Marchal & Cooper LLP.
The conviction of Bruce Garelick for insider trading in the Trump Media merger serves as a cautionary tale about the legal consequences of exploiting non-public information for personal gain. The case underscores the importance of upholding the integrity of financial markets and holding individuals accountable for illegal activities such as insider trading.
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