Trump Media & Technology Group is urging lawmakers to investigate potential stock manipulation of its ticker symbol DJT, which coincidentally shares the initials of former President Donald Trump.
In a letter dated April 23, Trump Media CEO Devin Nunes, a former Republican congressman from California, called on several House committees to launch an inquiry into the unusual trading activity of DJT.
The committees Nunes reached out to include the House Committee on the Judiciary, the Committee on Financial Services, the Committee on Ways and Means, and the Committee on Oversight and Reform.
Nunes has previously raised concerns that the media company's stock has become a target for dubious investors following its public debut in late March. He recently sought assistance from the Nasdaq stock exchange, where DJT is listed, to investigate potential instances of "naked" short selling, a practice prohibited in the U.S. due to its potential to disrupt prices by shorting a stock without borrowing the shares first.
"'Naked' short selling often involves sophisticated market participants profiting at the expense of retail investors," Nunes highlighted in his communication to House Republican committee leaders.
Shares of Trump Media have been on a rollercoaster ride since their initial public offering last month. Starting at $79.38 per share on March 26, the stock dropped to as low as $22.55 per share on April 16. However, it has since made a recovery, increasing by 4.2% to $33.95 per share in Wednesday afternoon trading.
Understanding naked short selling
Naked short selling is a practice where investors sell shares they do not own, hoping to buy them back at a lower price in the future. This differs from traditional short selling, where shares are borrowed before being sold. The potential impact of naked short selling on a company's stock price and market confidence is significant, as highlighted by law firm Kohn, Kohn & Colapinto.
Role of Wall Street trading firms
Citing data provided to him, Nunes mentioned that four companies have been responsible for 60% of the high volume of DJT shares traded in the market.
Several prominent Wall Street companies, including Citadel Securities and Jane Street Capital, are under scrutiny for their involvement in the trading of Trump Media Group (TMTG) shares. Other firms mentioned in the investigation are VIRTU Americas and G1 Execution Services.
Requests for comments from Citadel, Jane Street, and the other two firms have not been returned. Trump Media Group, known for its social media platform Truth Social, has drawn comparisons to "meme" stocks like GameStop, which often attract individual investors through social media hype rather than traditional financial metrics.
In a letter to lawmakers, Nunes emphasized the importance of investigating naked short selling of DJT's shares to protect shareholders, particularly TMTG's retail investors. He suggested that policy changes may be necessary, such as requiring brokers to improve documentation of stock borrowing efforts and increasing penalties for illegal naked short sellers.
