(Yahoo! Finance) - Trump Media (DJT) CEO Devin Nunes is urging Republican lawmakers to investigate "potential manipulation" of DJT's stock in response to what he claims to be "anomalous trading" of shares.
"Since April 2, 2024, DJT has appeared every day on Nasdaq’s 'Reg SHO threshold list,' which is indicative of unlawful trading activity," Nunes wrote in a letter sent to House GOP leaders on Monday. "This is particularly troubling given that 'naked' short selling often entails sophisticated market participants profiting at the expense of retail investors."
Short interest in DJT stock — bets that the stock price will fall rather than rise — is about 13% of outstanding shares, according to the latest data from S3 Partners. The company recently attempted to fend off short sellers by advising investors on ways to prevent their shares from being loaned for short-interest positions.
In order to "short" a stock, a trader must first borrow shares that are already owned before they can be sold. A "naked" short sale is an illegal practice of selling a short share that has not yet been borrowed.
"Reports indicate that, as of April 3, 2024, DJT was the single most expensive stock to short in US markets by a significant margin, meaning that brokers have a significant financial incentive to lend non-existent shares," Nunes's letter continued.
Trump Media, the parent company of Truth Social, went public on the Nasdaq after merging with special purpose acquisition company Digital World Acquisition Corp. in a deal approved by shareholders late last month. Shares, which climbed more than 10% on Wednesday, have fallen about 50% since the end of March.
Nunes singled out four market participants that have been responsible for more than 60% of the volume of DJT shares traded: Citadel Securities, VIRTU Americas, G1 Execution Services, and Jane Street Capital.
The claims echo what Nunes argued in a separate letter sent to Adena Friedman, chair and CEO of the Nasdaq, on April 18.
Representatives for Citadel, VIRTU, and Jane Street did not immediately respond to Yahoo Finance's request for comment.
Citadel, the hedge fund founded by Ken Griffin, responded to Nunes's April 18 claims in a fiery statement, writing: "Devin Nunes is the proverbial loser who tries to blame 'naked short selling' for his falling stock price."
"Nunes is exactly the type of person Donald Trump would have fired on the Apprentice. If he worked for Citadel Securities, we would fire him, as ability and integrity are at the center of everything we do."
Trump maintains a roughly 60% stake in Truth Social. At current levels of around $36 a share, Trump Media boasts a market cap of roughly $4.9 billion, giving the former president a stake worth around $2.9 billion. Right after the company's public debut, Trump's stake was worth just over $4.5 billion.
On Tuesday, the stock hit a milestone that secured Trump an additional $1.2 billion
By Alexandra Canal - Senior Reporter
