Three men from Florida have been arrested and charged with illegally making over $22 million through insider trading by taking advantage of confidential information about an acquisition firm’s plans to take a media company owned by former President Donald Trump public. The men, Michael Shvartsman, 52, Gerald Shvartsman, 45, and Bruce Garelick, 53, have been accused of using this information to buy millions of dollars of securities on the open market before the news was made public, and then selling them for significant profits after the announcement.
According to the indictment, Garelick was given a seat on the board of directors of Digital World Acquisition Corp. and had access to confidential information about the company’s plans to merge with Trump Media & Technology Group. He then shared this information with his alleged co-conspirators, including his brother Gerald, who was the chief investment officer of Michael’s venture capital firm, Rocket One Capital LLC.
The indictment also alleges that the men purchased securities, including warrants, of their own and shared the information with friends and employees, who also bought tens of thousands of units of securities ahead of the merger announcement. This illegal activity is believed to have occurred between June 2021 and November 2021.
The men’s scheme was uncovered through an investigation by the Securities and Exchange Commission (SEC) and the Southern District of New York. The SEC described the insider trading as “not easy money” and claimed it was a “bad bet” that would have resulted in significant financial losses for the defendants had they been caught earlier.
Florida Men Make Millions Through Insider Trading
The investigation into the men’s activities began after the merger announcement was made public in October 2021. At that time, the price of Digital World Acquisition Corp. securities increased significantly, resulting in a profit of over $22 million for the men.
The charges bring to light the illegal activities of insider trading and the importance of maintaining transparency in financial markets. Insider trading is considered a serious offense, as it allows individuals to make illegal gains by exploiting confidential information that is not available to the general public.
In this case, the defendants’ actions were described as a “bad bet” by US Attorney Damian Williams, who emphasized that his office is committed to investigating and prosecuting anyone who corrupts the financial markets. The charges serve as a warning to others who may be tempted to engage in similar illegal activities and demonstrate the government’s commitment to maintaining the integrity of financial markets.
The investigation is ongoing, and it is unclear what further charges may be brought against the men. However, the prosecution of these charges sends a strong message about the importance of ethical conduct in the financial industry and the consequences of engaging in illegal activities.
