Trump Media calls for investigation into alleged ‘naked’ short selling

Trump Media & Technology Group has fired another salvo in its war against short sellers betting against Donald Trump’s eponymous social media company.

Devin Nunes, CEO of Trump Media, has asked Nasdaq to cooperate in investigating alleged market manipulation of the company’s shares.

It demands trading information from 13 financial companies and requires Nasdaq to “fully cooperate with any congressional or other investigations into these companies.”

“DJT shares are held by more than 620,000 shareholders, the vast majority of whom are ordinary retail investors. A thorough investigation of anomalies in the trading of DJT shares would help protect these shareholders from market manipulation and safeguard them from potential illegal practices by Wall Street insiders,” Nunes wrote in a letter to Nasdaq CEO Adena Friedman.

Nunes first wrote a letter to Friedman in April to alert the stock exchange to “potential market manipulation.” Nasdaq was not immediately available for comment.

One of the firms targeted by Nunes, Citadel Securities – run by Republican major donor Ken Griffin – called Nunes a “loser” for blaming Trump Media’s losses on short selling.

Short sellers do not actually own the shares; they borrow them and then sell them in the hope that the price will fall so they can buy the shares back at a lower price and keep the difference.

Trump Media has accused financial firms of engaging in naked short selling, which involves betting on falling stock prices without borrowing or owning the stock. Such a practice can be illegal.

In the past, short selling has been used as a scapegoat for companies suffering from market pressure.

“Nunes may be trying to distract attention from the fact that Trump Media management is struggling to grow its revenue and become profitable,” said Jay Ritter, a finance professor at the University of Florida. “Whether or not naked short selling is taking place, it’s hard to justify an $8 billion market cap for a struggling company with $4 million in annual revenue.”

Trump owns 65% of the shares of the Truth Social App’s parent company. The stock trades under the vanity ticker symbol DJT.

Volatility has been the stock’s defining feature since it began trading following its merger with shell company Digital World Acquisition Corp. in March. It fluctuated widely from a high of $79.38 per share on March 26 to a low of $22.84 on April 16. It closed Wednesday up 3 percent at $46.75.

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