Trump Media warns Nasdaq of suspected market manipulation

Trump Media warns Nasdaq of suspected market manipulation

Trump Media, the parent company of the former president’s Truth Social, informed Nasdaq Inc. on Thursday about what the company suspects is illegal activity that is driving down its stock price.

In a letter to the exchange, Devin Nunes, CEO of Trump Media (DJT), presented what he believed could be considered a “naked” short sale.

Naked short selling involves someone selling shares that they do not own or have borrowed. They will often then try to buy shares at a lower price to protect themselves. This practice is generally illegal. While legal short sellers, people who want to benefit from a decline in the value of a company’s stock, borrow the stock before selling.

The letter was made public Friday in a filing with the Securities and Exchange Commission.

Nunes also noted in the letter that the company’s stock is on a list maintained by Nasdaq that “indicates illegal trading activity.”

“This is particularly worrying given that “bare” short selling often involves sophisticated market participants who profit at the expense of retail investors,” he said.

Representatives from Nasdaq and Trump Media did not immediately respond to requests for comment.

The company, which is majority-owned by former President Donald Trump, is down about 50% from its all-time high set on March 26, a day after it merged with the blank check acquisition company to go public.

The company’s stock has been wild since then.

Although the company is still worth billions of dollars, it is struggling to make money and needs cash. Experts have warned investors to be careful if they choose to trade the stock, as the company has no fundamentals to support its lofty valuation.

Trump Media lost $58 million in 2023 and only earned $4.1 million.

The company’s shares ended Friday’s session about 9.6% higher.