Gerald Schvartsman, a businessman who helped take Trump Media public, has been jailed for two years for insider trading charges.
Schvartsman and his brother, Michael Schvartsman, both pleaded guilty in April to one count of securities fraud, both in connection with their participation in an insider trading scheme surrounding the merger of Digital World Acquisition Corporation (DWAC) with Trump Media.
US Attorney Damian Williams said in April: “Michael and Gerald Shvartsman admitted in court that they received confidential, inside information about an upcoming merger between DWAC and Trump Media and used that information to make profitable, but illegal, open-market trades. Insider trading is cheating, plain and simple and today’s convictions should remind anyone who may be tempted to corrupt the integrity of the stock market that it will earn them a ticket to prison.”
According to the US Department of Justice, the Schvartsman brothers made at least US$22m in illegal profits by trading in securities of DWAC based on material, non-public information about DWAC’s planned, but not yet public, merger.
“In violation of the non-disclosure agreements that they had signed, and in contravention of their associate’s duties and responsibilities as a board member, the defendants bought millions of dollars of DWAC securities on the open market before the news of the Trump Media business combination was public,” said the DOJ. “The defendants also tipped others about the upcoming merger, inducing further trades in DWAC securities on the basis of the MNPI they had obtained subject to their non-disclosure agreement and through their associate’s board seat.”
Prosecutors were pushing for at least a two-year sentence for Schvartsman. His defence attorneys were hoping to get away with 18 months probation for the charges. Schvartsman’s lawyers argued he has “lost his reputation and suffered humiliation both personally and professionally. He has lost significant amounts of business through the loss of banking, credit cards, customers and vendors…His wife and children have suffered and there will continue to be huge collateral consequences of his actions, which is a significant punishment in and of itself.”
Michael Schvartsman will be sentenced later today. A third individual, Bruce Garelick, was also involved in the scheme, and is due to be sentenced on 7th November.
Former US president and current presidential candidate, Donald Trump, is a majority shareholder of Trump Media, owning approximately 57% of the company. He recently said he has no plans to sell his shares, telling a news conference in LA last month: “I don’t need money.”
