Trump Media Urges US House Investigation: "Stock Price Drop Due to Illegal Activities"

Regarding Stock Price Decline, "There Are Strong Signs of Illegality"
Experts Say "No Evidence Seen"

Former U.S. President Donald Trump, the major shareholder of 'Trump Media,' has called on the U.S. House of Representatives to investigate, claiming that the stock price fell due to illegal activities.

Earlier, the parent company of the social media platform Truth Social, 'Trump Media and Technology (DJT),' experienced recent sharp fluctuations in its stock price as it was recognized as a meme stock. After a reverse merger on the New York Stock Exchange on the 26th of last month, the stock price surged over two days, reaching an intraday high of $79.09, but then turned bearish and closed at $35.67 on that day.

Trump Media & Technology, which operates former President Donald Trump's social networking service (SNS) Truth Social, requested an investigation by Congress on the 24th (local time), claiming that the recent sharp decline in stock prices was the result of illegal short selling.
[Photo by Reuters/Yonhap News]

On the 24th (local time), CNN reported that the company claimed malicious investors were using certain Wall Street institutions to short-sell Trump Media's stock, driving down the price.

Devin Nunes, CEO, stated in a letter sent to the chairpersons of four standing committees of the U.S. House of Representatives?Taxation, Judiciary, Financial Services, and Oversight?that "there is strong evidence that Trump Media's stock price has been illegally manipulated." This information was revealed through documents Trump Media filed with the U.S. Securities and Exchange Commission (SEC).

In the letter, CEO Nunes asserted, "Trump Media appears daily on the Nasdaq's Short Sale Regulation (SHO regulation) list, which indicates illegal trading activity," adding, "Naked short selling often profits at the expense of individual investors, making it a problematic practice in the market."

The SEC enforces mandatory reporting if short sale volumes exceeding certain thresholds fail to be cleared for five consecutive trading days to prevent reckless short selling. CEO Nunes emphasized, "This is particularly problematic because professional market participants involved in these short sales profit by sacrificing individual investors."

Former U.S. President Trump's social media app 'Truth Social'
[Photo by EPA / Yonhap News]

Ultimately, he claimed that there are frequent instances where someone conducts naked short selling on Trump Media without borrowing the shares and then fails to cover their positions.

Trump Media stated, "As of April 3 this year, it is the highest-priced stock among those shorted in the U.S. market," arguing, "This creates significant financial incentives for brokers to lend out shares that do not even exist."

He especially pointed suspicion at Citadel Securities, Virtu America, G1 Execution Services, and Jane Street Capital, which account for 60% of Trump Media's stock trading volume.

Earlier, on the 18th, Trump Media also sent a letter to Nasdaq urging them to "pay attention to potential market manipulation."

Regarding this, Jonathan Macey, a professor at Yale Law School, pointed out in an email to CNN, "There is no evidence that these claims are true."

Jay Ritter, a professor of finance at the University of Florida, said, "The reason short sellers want to short the stock is that it is overvalued," emphasizing that Citadel Securities and Jane Street Capital are among the most active market makers in the U.S.