Topline
An investor was sentenced to almost two years in prison Wednesday after pleading guilty to a $22 million insider trading scheme involving the effort to take Trump Media & Technology Group public, Bloomberg reported.
Gerald Shvartsman, hides from photojournalists using an umbrella after exiting Federal Court, … [+]
Key Facts
Gerald Shvartsman was sentenced to 22 months in prison for using confidential information about blank check firm Digital World Acquisition Corp.’s merger with Trump Media to make $22 million worth of illegal trades alongside his brother, Michael, and an associate Michael placed on Digital World’s board of directors, Bloomberg reported.
Former President Donald Trump and his company have not been accused of wrongdoing in the cases.
Prosecutors sought a 24-month prison sentence while Shvartsman’s lawyers pushed for 18 months of home confinement, arguing a harsh sentence would not deter others from committing similar financial crimes, according to Bloomberg, which noted Michael Shvartsman’s sentencing is scheduled for Thursday while the associate, Bruce Garelick, will be sentenced Nov. 7.
Gerald and Michael signed non-disclosure agreements with Digital World providing them with information about its upcoming merger with Trump Media, using the information and Garelick’s position on Digital World’s board of directors to make trades prior to the merger’s announcement.
Garelick was convicted of conspiracy and securities fraud in May for trading shares prior to the merger and illegally profiting about $50,000 from doing so (he faces up to 25 years in prison).
Roland Riopelle, Shvartsman’s lawyer, told Forbes he was disappointed with the outcome of the case, but noted it is “hard to be too disappointed” with the amount of prison time Shvartsman received, noting it is lower than what was sought by prosecutors.
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Tangent
Trump Media shares are up more than 11% at around $30.20 as of Wednesday afternoon, partially recovering from a slump in price Tuesday.
Forbes Valuation
We estimate Trump’s net worth at $5.5 billion, with a large chunk of the figure rooted in his around 60% stake in Trump Media, the parent company of Truth Social.
Key Background
Digital World, a special-purpose acquisition company, approved its merger with Trump Media in late March. The combined company trades under the symbol DJT and was valued at nearly $8 billion after its first day of trading on the Nasdaq. Trump Media’s market cap is $6 billion as of Wednesday, with company shares—which are extremely volatile—continuing to rally after reaching a record low in September, when the stock was priced at $12.15 per share. The merger between Digital World and Trump Media experienced significant delays, as the Securities and Exchange Commission charged the former company with making “material misrepresentations” to investors by failing to disclose it established a plan to take Trump Media public before filing an initial public offering. The case was settled for $18 million.
Further Reading
Trump Social Media Investor Gets Prison for Insider Trading (Bloomberg)
2 Brothers Plead Guilty In Trump Media Insider Trading Case (Forbes)
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