NEW YORK: Two men pleaded guilty on Wednesday to insider trading in securities in the company that ultimately took former US president Donald Trump’s media business public.
Michael Shvartsman, 53, head of Miami-based venture capital firm Rocket One Capital, and his brother Gerald Shvartsman, 46, each pleaded guilty to one count of securities fraud before US District Judge Lewis Liman in Manhattan.
Rocket One’s chief investment officer, Bruce Garelick, is scheduled to face trial on related charges on April 29.
Prosecutors charged the trio last year with illegally trading on inside information about Trump Media & Technology Group’s (TMTG) DJT.O plan to go public through a merger with a blank-check company. TMTG operates Truth Social, Trump’s main social media platform. Prosecutors said the trio signed confidentiality agreements in June 2021 when they were approached to become early investors in Digital World Acquisition, the blank-check company. The agreements required them to keep information they learned confidential and not trade the company’s securities in the open market, prosecutors said.
After hearing the company was in merger talks with TMTG, prosecutors said the trio tipped others and bought Digital World securities, selling them after the deal was announced on Oct 20, 2021, to make a total of $22 million in illegal profit. Michael and Gerald Shvartsman said in court that they knew what they were doing was wrong when they traded on nonpublic information. “I’ve made a terrible mistake,” Gerald Shvartsman said at the hearing.
