Devin Nunes, former chairman of the House Intelligence Committee and current CEO of the Trump Media & Technology Group (TMTG), has requested an investigation into possible irregularities in DJT stock trading. In a letter sent to several House committee chairs, Nunes contends that DJT’s continual presence on Nasdaq‘s “Reg SHO threshold list” suggests evidence of illicit trading activity by what he alleges is a group of organized short sellers.
“This is particularly troubling given that ‘naked’ short selling often entails sophisticated market participants profiting at the expense of retail investors,” Nunes’s letter reads. He adds: “Reports indicate that, as of April 3, 2024, DJT was the single most expensive stock to short in U.S. markets by a significant margin, meaning that brokers have a significant financial incentive to lend non-existent shares.”
Nunes continues: “Furthermore, data made available to us indicate that just four market participants have been responsible for over 60 [percent] of the extraordinary volume of DJT shares traded.” The former House Republican claims the companies involved in the short-selling scheme are Citadel Securities, VIRTU Americas, G1 Execution Services, and Jane Street Capital.
The practice of “naked” short-selling is largely banned in the United States and Europe. In this type of transaction, a trader sells shares in an asset — in this case, the DJT stock — without having actually borrowed or otherwise secured the shares. In the U.S., traders must provide the Securities and Exchange Commission (SEC) with adequate evidence showing they believed the shares could be borrowed before engaging in a short sale.
Noting the evidence that the four firms have engaged in a “naked” short sale plot, Nunes writes: “Overall, we assess there are strong indications of unlawful manipulation of DJT stock,” adding that “an inquiry is needed to protect shareholders, including TMTG’s retail investors.”
