A SPAC merger linked to the media arm of former President Donald Trump has several parties being investigated for insider trading. The SPAC merger has faced many setbacks since being announced in October 2021.
What Happened: A merger between Donald Trump’s Trump Media & Technology Group and Digital World Acquisition Corporation DWAC has seen several delays in its approval and merger vote date since it was announced.
In a further blow, it was announced on Thursday that insider trading charges have been brought against three individuals linked to the financing of a Trump Media & Technology unit.
Michael Shvartsman, Gerald Shvartsman and Bruce Garelick were charged with insider trading. The three people in question helped fund Truth Social, a unit of Trump Media & Technology.
The report says that the three parties made over $22 million through the trading of shares of Digital World Acquisition Corporation.
All three individuals were taken into custody on Thursday on charges of securities fraud.
Garelick was given a seat on the Digital World Acquisition Corporation Board of Directors after investing in the IPO. The investor received information linking the SPAC to Trump Media and shared it with the other two, according to a court filing.
The court filing says Garelick broke a non-disclosure agreement and also took part in insider trading with his own trades and by sharing the information with the other two parties.
Along with the three buying up shares of the SPAC prior to the news of the merger announcement, friends, neighbors, and co-workers were also told of the news and encouraged to buy the stock and warrants.
Related Link: Trump's DWAC Stock Tanks, How A Trump Media Money Laundering Investigation Has Putin Undertones
Why It’s Important: The latest court filing continues the bad news for a SPAC that was once the best-performing IPO of 2021 before drastically falling.
Shvartsman faces six counts of securities fraud and one count of conspiracy. The securities fraud charges have maximum sentences of 20 to 25 years in prison. The conspiracy charge has a maximum sentence of five years in prison.
Shvartsman faces four counts of securities fraud and one count of conspiracy. The securities fraud counts carry a maximum sentence of 20 to 25 years in prison. The conspiracy count comes with a maximum sentence of five years in prison.
Garelick faces six counts of securities fraud and one count of conspiracy. The securities fraud counts carry a maximum sentence of 20 to 25 years in prison. The conspiracy count comes with a maximum sentence of five years in prison.
The SPAC merger has been delayed multiple times, with the latest vote date to finalize the merger set for September 2023.
Shares of the SPAC have been volatile in recent months, often rising as Trump has been indicted and faces federal charges related to classified documents found at Mar-A-Lago.
DWAC Price Action: Digital World Acquisition shares are up 0.3% to $12.70 versus a 52-week trading range of $12.34 to $33.63. Shares of the SPAC are down 44% in the last year.
Read Next: Trump SPAC Merger Has Provisions For Presidential Run And Prison Time
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