United States SEC Charged Former SPAC Board Member of Digital World Acquisition Corporation for Insider Trading to Acquire Trump Media & Technology Group, Generated Profit of $22.9 Million from Trades
30th June 2023 | Hong Kong
The United States Securities & Exchange Commission (SEC) has charged former SPAC (special purpose acquisition company) board member of Digital World Acquisition Corporation (Bruce Garelick & firm Rocket One Capital, Gerald Shvartsman) for insider trading before announcement to acquire Trump Media & Technology Group, generating profit of $22.9 million from the insider trades. United States SEC: “The Securities and Exchange Commission today filed insider trading charges against Bruce Garelick, a former board member of Digital World Acquisition Corporation (DWAC), a special purpose acquisition company (SPAC); Michael Shvartsman and his firm Rocket One Capital LLC; and Gerald Shvartsman for trading in advance of DWAC’s October 2021 announcement that it had reached an agreement to acquire Trump Media & Technology Group Corp. (TMTG). The SEC’s complaint alleges that, after DWAC appointed Garelick as a member of its board of directors in September 2021, Garelick learned about, and voted on, material nonpublic actions and updates regarding the negotiations between DWAC and its merger target, TMTG. Garelick, who was separately employed as the chief strategy officer at Rocket One Capital, then allegedly shared those updates with his boss, Michael Shvartsman, who in turn shared them with his brother, Gerald Shvartsman. Each then allegedly purchased DWAC securities on the open market based on the material nonpublic information they learned about DWAC. Michael Shvartsman placed his trades through an account in the name of Rocket One Capital. The defendants then sold their positions shortly after DWAC announced it had signed a merger agreement with TMTG and collectively realized illicit profits of more than $22.9 million from those trades. The complaint further alleges that, despite being a DWAC director and thus having certain reporting obligations, Garelick failed to file SEC Forms 4 and 5 related to his transactions in DWAC securities.” Gurbir S. Grewal, Director of the SEC’s Division of Enforcement: “As a board member, Garelick not only had access to information about DWAC’s upcoming merger announcement, but also a duty to maintain the confidentiality of that information. Rather than adhere to his duty as an insider, we allege that Garelick, together with the Shvartsmans, monetized that information to generate over $20 million in illicit profits. This case demonstrates the Commission’s ongoing commitment to exposing insider trading wherever it occurs, including in SPAC mergers, and also highlights the importance of Section 16 filing requirements, as such filings inform the markets and Commission about trades by directors and other corporate insiders.”
“ United States SEC Charged Former SPAC Board Member of Digital World Acquisition Corporation for Insider Trading to Acquire Trump Media & Technology Group, Generated Profit of $22.9 Million from Trades “
United States SEC Charged Former SPAC Board Member of Digital World Acquisition Corporation for Insider Trading to Acquire Trump Media & Technology Group
29th June 2023 – The Securities and Exchange Commission today filed insider trading charges against Bruce Garelick, a former board member of Digital World Acquisition Corporation (DWAC), a special purpose acquisition company (SPAC); Michael Shvartsman and his firm Rocket One Capital LLC; and Gerald Shvartsman for trading in advance of DWAC’s October 2021 announcement that it had reached an agreement to acquire Trump Media & Technology Group Corp. (TMTG).
The SEC’s complaint alleges that, after DWAC appointed Garelick as a member of its board of directors in September 2021, Garelick learned about, and voted on, material nonpublic actions and updates regarding the negotiations between DWAC and its merger target, TMTG. Garelick, who was separately employed as the chief strategy officer at Rocket One Capital, then allegedly shared those updates with his boss, Michael Shvartsman, who in turn shared them with his brother, Gerald Shvartsman. Each then allegedly purchased DWAC securities on the open market based on the material nonpublic information they learned about DWAC. Michael Shvartsman placed his trades through an account in the name of Rocket One Capital. The defendants then sold their positions shortly after DWAC announced it had signed a merger agreement with TMTG and collectively realized illicit profits of more than $22.9 million from those trades. The complaint further alleges that, despite being a DWAC director and thus having certain reporting obligations, Garelick failed to file SEC Forms 4 and 5 related to his transactions in DWAC securities.
“As a board member, Garelick not only had access to information about DWAC’s upcoming merger announcement, but also a duty to maintain the confidentiality of that information. Rather than adhere to his duty as an insider, we allege that Garelick, together with the Shvartsmans, monetized that information to generate over $20 million in illicit profits,” said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement. “This case demonstrates the Commission’s ongoing commitment to exposing insider trading wherever it occurs, including in SPAC mergers, and also highlights the importance of Section 16 filing requirements, as such filings inform the markets and Commission about trades by directors and other corporate insiders.”
The SEC’s complaint, filed in the United States District Court for the Southern District of New York, charges the defendants with violating the antifraud provisions of the federal securities laws and also charges Garelick with violating the reporting obligations of Section 16 of the Exchange Act. The complaint seeks permanent injunctive relief, disgorgement of ill-gotten gains, prejudgment interest, and civil penalties against all defendants, as well as officer and director bars against Garelick and Michael Shvartsman.
In a parallel action, the U.S. Attorney’s Office for the Southern District of New York today announced criminal charges against Garelick and the Shvartsmans.
The SEC’s investigation was conducted by Andrew McFall, David Bennett, Darren Boerner, and Patrick McCluskey of the Market Abuse Unit and Lindsay S. Moilanen of the New York Regional Office. The case was supervised by Joseph Sansone of the Market Abuse Unit and Thomas P. Smith, Jr. of the New York Regional Office. The SEC’s litigation is being led by John Timmer, James Connor, and Mr. McFall and supervised by Olivia Choe. The SEC appreciates the assistance of the U.S. Attorney’s Office for the Southern District of New York, the FBI, and the Financial Industry Regulatory Authority.
Sign Up / Register
Caproasia Users
- Manage $20 million to $3 billion of assets
- Invest $3 million to $300 million
- Advise institutions, billionaires, UHNWs & HNWs
Caproasia Platforms | 11,000 Investors & Advisors
- Caproasia.com
- Caproasia Access
- Caproasia Events
- The Financial Centre | Find Services
- Membership
- Family Office Circle
- Professional Investor Circle
- Investor Relations Network
Monthly Roundtable & Networking
Family Office Programs
The 2024 Investment Day
- March 2024 - Hong Kong
- March 2024 - Singapore
- June 2024 - Hong Kong
- June 2024 - Singapore
- Sept 2024 - Hong Kong
- Sept 2024 - Singapore
- Visit: The Investment Day | Register: Click here
Caproasia Summits
- The Investment Summit
- The Private Wealth Summit
- The Family Office Summit
- The CEO & Entrepreneur Summit
- The Capital Markets Summit
- The ESG / Sustainable Investment Summit
