Trump Media has gotten Congress involved in its crusade against short sellers

[BumRushDaShow]

Source: Business Insider

Apr 24, 2024, 3:45 PM EDT


The CEO of Trump Media filed a letter on Tuesday urging House Republican committee heads to look into the possibility of illegal manipulation of the company's stock, which has plunged since it went public at the end of March. Devin Nunes said in the letter that the firm has identified a "strong indication" of shady trading, and the committee should swiftly investigate its scope, including "whether any laws, including RICO statutes and tax evasion laws, were violated."

The letter said the Truth Social parent company, which is majority-owned by former President Donald Trump, has fallen prey to "naked" short selling, an illicit practice that involves selling shares before knowing if any are available to borrow in order to short them.

The CEO pointed out the cost of shorting shares of Trump Media was the highest in US markets by a long shot as of April 3, which means that brokers have "a significant financial incentive to lend non-existent shares."

Trump Media stock has been on a roller coaster ride since its IPO at the end of last month, hitting $35.05 a share Wednesday, up almost 8% after a 54% drop from its peak.

Read more: https://markets.businessinsider.com/news/stocks/trump-media-spac-djt-ceo-letter-congress-naked-short-sellers-2024-4

[captain queeg]

1. Nunes crawled out from under his rock?

I guess we’ll see if the rethugs in congress are still in thrall to TSF.

[Raven123]

2. I don't like short selling

In principle. No reason. Just seems like betting on failure and it bugs me. Reminds me of the SNL skit recently parodying FanDuel ( or one of those gambling apps) in which participants bet on their neighbors misfortunes.

Having said that, I see no reason why TFG shouldn’t be shorted, as long as it is done legally. Heck he has been shorting the USA for the last 9 years

[Traurigkeit]

7. 'Short Selling' or better called 'gambling'. Normal for people with excess funds just burning a hole it their pockets

[kimbutgar]

12. In the 90's when I traded stocks I used to short sell some stocks and made a nice it of money but the SEC

Cracked down on it.

[oldsoftie]

14. Institutional shorting should be illegal

As well as shorting lower volume companies.

Martin Shkreli cost a lot of people a lot of money shorting a company right before filing a bogus "citizens petition" to tank the stock. All legal. Shouldn't be

If you think a price should be lower, buy put options

[Bernardo de La Paz]

16. Short selling, like regular selling, adds liquidity & shifts investment from losers to winners

In the long run, selling whether it is short or covered, shifts investment from failing companies to successful ones, on average, across many stocks and investors, over time. Individual short sales are prone to mistakes just like regular buys and sales so not every short is the right move.

For every sale, there is a willing buyer, whether the sale is short or not. At any time, the short seller may get a margin call and have to buy the stock to pay back the stock lender. Ultimately the short seller can be expected to buy the stock to close out the position at a profit or loss -- another sale.

Thus short selling adds liquidity to the market for buyers.

[Oopsie Daisy]

20. Short selling can serve as a check on excessive speculation or overvaluation in the market.

Short selling can serve as a check on excessive speculation or overvaluation in the market. When a stock is considered overpriced, short sellers can provide a counterforce by actively betting against it, potentially helping to correct any unwarranted price surges.

Short selling can help uncover overvalued stocks or identify potential market inefficiencies. When short sellers analyze and act upon negative information about a company, it can lead to more accurate pricing of its shares, reflecting the true market sentiment.

[louis-t]

3. He doesn't like it when people bet on him to fail.

And he always fails anyway.

[IronLionZion]

4. Devin Nunes!

I worry about anyone who trusts that guy or Trump

[Captain Zero]

5. What? Nunes doesn't like CAPITALISM?

Guess he must be a Socialist now.

[Bernardo de La Paz]

17. Naked short selling means selling something that doesn't exist

It is illegal for that reason. Naked short selling is not a part of regulated capitalism, it is a part of crime.

Regular short selling means selling something that exists, a share borrowed from an owner of the stock who has made it available on loan via a margin account and similar arrangements. Almost always that has to be paid back by the shorter to the stock owner, sooner or later.

If your post is not about the implied topic (short selling) but rather about the fall of DJT stock, then you need to be explicit about the context shift.

[Traurigkeit]

6. So 'Trump Media' wants House Republicans to investigate Mr. Donald J. Trump, is that right ?

[sybylla]

8. Still trying to cover for the release of info saying TS was losing it's ass and

not likely to survive for long. Why tf would anyone buy it? Why would its value grow?

[iluvtennis]

9. Short selling has been around for a hundred years...but because they short TSF's stock, now it's wrong

and the laws need to change - GMAFB.

[IronLionZion]

11. I doubt they can change the laws fast enough to save Trump's company

but there are opportunities for better regulations here.

[iluvtennis]

13. + agree on better regulations.

[Bernardo de La Paz]

18. Yes, shorting has even older history, but Nunes is objecting to naked short selling which is illegal

Naked short selling is selling something that doesn't exist.

Covered short selling is selling shares that exist because their owner has loaned them out to the market maker to aid liquidity.

The distinction is important.

[iluvtennis]

19. Thanks for clarifying. n/t

[BadgerKid]

10. Couldn't the shorters just move operations overseas?

Some of the meme stock followers have been complaining about naked short selling for a few years.

[Bernardo de La Paz]

23. Not unless tRump moves stock to foreign exchange. Trades occur on NY Stock Exchange. . . . . nt

[NBachers]

15. The schemers are steaming 'cause they got schemed. I love watching this ship of fools sink. May they all go down with it

[Oopsie Daisy]

21. Making false accusations or evidence-free insinuations that something illegal is going on *

* is a crime, right? While CEOs may assert plausible deniability if they claim they were genuinely unaware of the lack of evidence or the misleading nature of their statements, this may not absolve them entirely from legal or regulatory consequences.

The degree of personal responsibility will depend on factors such as the CEO's knowledge, intent, and the specific legal requirements in the jurisdiction involved.

[Old Crank]

22. Interesting that the people who hate government

interventions are so quick to want government to step in.

[Roy Rolling]

24. This 👆

👏

[Hotler]

25. " Nature of the free markets." That's what they tell us little people when we get screwed over. nt

[Roy Rolling]

26. Crusade?

Beware of false prophets sending MAGAts off to war. Truth Social is a terrible idea, it’s a terrible stock, and it’s a terrible investment.

Every decent investor knows ETTD.

[Bristlecone]

27. The same freedom and 1A loving Devin Nunes

That sued a twitter cow, wrote this letter?

Shocked.

[Miguelito Loveless]

28. If they want to outlaw short selling

that is fine with me. It is just another way to game the system to make money while doing nothing productive.

[hadEnuf]

29. This complaint may be valid or not. I don't claim to know much about the subject

What I do see is how Republicans and MAGATs run to the congress, SCOTUS and everyone else when they have a problem or want something. Government is nothing more than a tool or a weapon for their personal problems or wants.

Less government my ass.