Two Florida brothers, Michael and Gerald Shvartsman, pleaded guilty to insider trading charges in Manhattan federal court. They admitted to making over $22 million illegally before the public announcement that an acquisition firm was taking former President Donald Trump’s media company public in 2021. The men acknowledged that they knew they were committing a crime when they made trades in October 2021 through a New York broker, and expressed remorse for their actions. The indictment against them did not implicate Trump or his media company, Trump Media & Technology Group, which owns Truth Social.
The brothers invested millions of dollars in the securities of the special purpose acquisition company Digital World Acquisition Corp. after being tipped off about a potential target of DWAC and another acquisition company, Benessere Capital Acquisition Corp., which was Trump Media. They sold their securities for $22 million in profits once the news about the Trump Media business was made public. Michael Shvartsman owned Rocket One Capital LLC, a venture capital firm at the time, and shared insider information with friends and employees who also bought securities ahead of the merger announcement with Trump Media & Technology Group.
The merger and public trading of Trump Media & Technology Group was highly anticipated by Trump’s political supporters, as the Truth Social platform was seen as a response to his temporary ban from certain social media platforms following the Jan. 6, 2021, insurrection at the U.S. Capitol. The brothers, who are from Florida, remain free on bail as they await their sentencing, which is scheduled for July 17. Federal sentencing guidelines recommend that Michael Shvartsman receive around four years in prison and his brother spend at least three years behind bars. They are also required to forfeit their profits from the illegal trades.
U.S. Attorney Damian Williams emphasized that insider trading is cheating and stated that the convictions of the Shvartsman brothers should serve as a reminder to anyone tempted to corrupt the integrity of the stock market that it will result in prison time. Insider trading is a violation of securities laws and undermines the fairness and transparency of the financial markets. The case highlights the consequences of engaging in illegal trading activities and the importance of upholding ethical standards in the financial industry. The guilty pleas of the Shvartsman brothers demonstrate the serious repercussions of insider trading and the commitment of law enforcement to prosecute those who engage in such illegal activities.
