Truth Social owner Trump Media asks Congress to investigate ‘disturbing’ market manipulation allegations

Truth Social owner Trump Media asks Congress to investigate ‘disturbing’ market manipulation allegations

Trump Media & Technology Group is asking Congress to investigate its suspicions that illegal activity is driving down its stock price.

In a letter released Wednesday, Devin Nunes, CEO of Trump Media owner Truth Social (DJT), informed the GOP Chairman of the House Ways and Means, Judiciary, Financial Services and Oversight Committee about the “urgent matter” of “potential manipulation.” ” of the company’s stock price.

“We assess that there are strong indications of illegal manipulation of DJT shares,” Nunes wrote in the letter.

Nunes, himself a former Republican congressman from California, pointed out how Trump Media has become one of the most expensive stocks to borrow from. Traders who want to short a stock, or bet its value will go down, must first borrow the stock elsewhere.

Nunes suggested there are signs of “naked” short selling, which involves someone selling shares they don’t own or haven’t borrowed.

“This is particularly troubling given that ‘bare’ short selling often involves sophisticated market participants who profit at the expense of retail investors,” wrote the Trump Media CEO.

However, some experts expressed skepticism about the claims of market manipulation.

“There appears to be no evidence that these claims are true,” Jonathan Macey, a professor at Yale Law School, told CNN in an email.

Jay Ritter, a finance professor at the University of Florida, said there is a more obvious explanation why some traders are betting against Trump Media.

“The reason short sellers want to short a stock is because the stock is overvalued,” said Jay Ritter, a professor of finance at the University of Florida. “It doesn’t take a PhD in finance to conclude that the stock is overvalued and will almost certainly fall in price.” Trump Media recently reported a $58 million loss in 2023 on very little revenue. The company’s price-to-sales ratio – a common way to value stocks – is off the charts when compared to rival social media companies.

Since peaking at $66 in late March, Trump Media’s share price has lost more than half its value.

In a letter to Congress, Trump Media said the data showed “just four market participants have been responsible” for more than 60% of the company’s extraordinary amount of shares: Citadel Securities, Virtu Americas, G1 Execution Services and Jane Street Capital.

However, Ritter notes that Citadel Securities and Jane Street are among the most active market makers in almost every stock traded in America. “That statement applies to almost every stock,” he said.

Last week, Nunes wrote a letter to Nasdaq, where Trump Media shares trade, informing the exchange of concerns about market manipulation. The letter also mentioned Citadel Securities, a firm founded by billionaire Republican donor Ken Griffin.

Citadel Securities hit back at Trump Media last week, telling CNBC in a statement: “Devin Nunes is the proverbial loser who tried to blame ‘naked short selling’ for his stock price collapse.” A Citadel spokesman added: “If he [Nunes] worked for Citadel Securities, we would have fired him.”