In a recent development in the world of finance, investor Bruce Garelick was convicted of insider trading in the stock of Digital World Acquisition Corp. ahead of its merger announcement with Trump Media in October 2021. Garelick, who was a board member of Digital World Acquisition Corp. at the time, was accused of sharing and exploiting non-public information about the merger plans with then-privately held Trump Media.
Former President Donald Trump, the majority shareholder of Trump Media, was not implicated in the case against Garelick. Two co-defendants of Garelick, Michael and Gerald Shvartsman, pleaded guilty to insider trading charges related to the case earlier in April.
After a trial that began on April 30, Garelick was found guilty by a federal jury in New York on five counts of securities fraud and conspiracy. Garelick, who testified at his trial, is scheduled to be sentenced on September 12. Prosecutors alleged that Garelick, along with the Shvartsman brothers, made significant profits from the illicit trades based on non-public information about the merger.
Manhattan U.S. Attorney Damian Williams stated that Garelick violated the law by using insider information to trade and tip others, emphasizing that insider trading is always a losing bet. The merger between Digital World Acquisition Corp. and Trump Media was completed in late March, with public trading of the company's stock under the new ticker DJT beginning shortly after.
In a related development, the Securities and Exchange Commission charged Trump Media's former auditor, BF Borgers CPA, with "massive fraud" involving accounting work for numerous publicly traded companies. The auditor and its owner agreed to be permanently suspended from practicing as accountants before the SEC and pay $14 million in civil penalties. Trump Media has since hired a new auditor, Semple, Marchal & Cooper LLP, to replace BF Borgers.