Updated Jun 29, 2023 - Economy

Three charged with insider trading on Trump's SPAC deal

Illustration of a cell phone displaying the Truth Social app logo on a shattered screen.

Illustration: Aïda Amer/Axios

Federal authorities on Thursday arrested and charged three men with insider trading, related to a blank-check company's planned merger with a social media company founded by former President Trump.

The big picture: The charges do not implicate Trump or anyone else directly involved with Truth Social, but do stem from investigations that have prevented the company from going public.

Driving the news: Prosecutors allege that the defendants learned that Digital World Acquisition Corp. (DWAC) had agreed to purchase Trump Media & Technology Group, and bought shares of DWAC before the merger was publicly announced.

  • The merger announcement caused DWAC shares to spike, after which the men allegedly generated $22 million in "illegal profits" by selling their stock.
  • One of the defendants, Bruce Garelick, was a director of DWAC, whose shares have fallen more than 40% over the past year and more than 85% from their all-time closing high.
  • All three arrests occurred in Florida.

What we're watching: The complaint notes that Trump and other associates had conversations about a SPAC merger with the sponsor of DWAC, prior to DWAC itself going public.

  • That could lead to future charges from securities regulators, given that SPACs are not supposed to have such talks prior to IPO.

Read the complaint:

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