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An architect behind the plan to publicize Donald Trump’s media business has been charged with insider trading after allegedly leaking information about the transaction during a trip to Las Vegas and helping two of his associates illicitly secure $22.8 million in to make dollars.
According to prosecutors, Bruce Garelick, who served on the board of directors of Digital World Acquisition Corporation, was arrested Thursday along with brothers Michael Shvartsman and Gerald Shvartsman on criminal charges filed by the US Attorney in Manhattan. The Securities and Exchange Commission has also filed a civil complaint against the three businessmen.
DWAC briefly became one of the top-performing companies in the stock market after announcing its merger with Trump Media & Technology Group, which runs former President’s social media platform Truth with a mission to “crack the culture” and Big Die to defy technology”.
Following the October 2021 announcement, shares in the acquisition special purpose vehicle went from around $10 to as high as $175. The proposed deal with TMTG has since been delayed due to pending regulatory investigations.
Garelick and the Shvartsmans bought shares in DWAC months before the Trump deal was announced and sold it shortly thereafter at hefty profits, according to court filings Thursday.
Prosecutors allege that Garelick, who was also the chief strategy officer at Rocket One Capital, an investment firm led by Michael Shvartsman, shared information with the Shvartsman brothers about the progress of DWAC’s merger with TMTG and encouraged them to buy warrants , which later led to an increase in demand price.
Grant Smith, an attorney for the Shvartsmans, declined to comment. An attorney for Garelick did not immediately respond to a request for comment.
The SEC referenced text messages and emails from Garelick apparently contemplating a deal with Trump months before such a transaction was announced.
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In June 2021, Garelick emailed a request to invest in what he “[the] Trump Space”.
“There’s a chance you’ll enjoy it,” Garelick told his daughter later that month. “Your father could be appointed to the board of directors of Trump Media Group.”
In another message, Garelick described his potential DWAC board seat as “a front-row babysitting job” that is “well worth it for an unconventional investment like this.”
In an August 2021 filing with the SEC, DWAC told investors that it “[had] no specific business combination target selected”.
“As a board member, Garelick not only had access to information regarding DWAC’s upcoming merger announcement, but also had a duty to maintain the confidentiality of that information,” said Gurbir Grewal, the SEC’s director of enforcement. “Rather than fulfilling his duty as an insider, we allege that Garelick, along with the Shvartsmans, monetized this information to generate over $20 million in illicit profits.”