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One of the architects of a scheme to publicize Donald Trump’s media business has been charged with insider trading after he allegedly shared information about the deal during a trip to Las Vegas and helped two of his associates make $22.8 million in illicit deals.
Bruce Garelick, who was on the board of directors for Digital World Acquisition Corporation, was arrested Thursday along with brothers Michael Schwartzman and Gerald Schwartzman, on criminal charges brought by the US Attorney in Manhattan, according to the US Attorney’s Office. The Securities and Exchange Commission also filed a civil lawsuit against the three businessmen.
DWAC briefly became one of the stock market’s best performers after announcing it would merge with Trump Media & Technology Group, which operates the former president’s Truth Social media platform with the goal of “de-cluttering ‘cancel culture’ and standing up to big tech”.
Shares in the SPCA rose from about $10 to $175 after the announcement in October 2021. The planned deal with TMTG has been delayed due to pending regulatory investigations.
Garelick and Shvartsmans bought shares in DWAC months before Trump’s deal was announced, and sold them shortly thereafter, turning a big profit, according to court documents filed Thursday.
Prosecutors allege that Garelick, who was also chief strategy officer at Rocket One Capital, an investment firm run by Michael Shvartsman, passed information about how DWAC’s merger with TMTG was progressing to the Shvartsman brothers, encouraging them to purchase warrants that subsequently rose in price.
Grant Smith, an attorney for the Schwarzman family, declined to comment. Garelick’s lawyer did not immediately respond to a request for comment.
The SEC noted text messages and emails from Garelick in which he appeared to be considering a deal with Trump, months before any such deal was announced.
In June 2021, Garelick sent an email requesting investments in what he called “[the] Trump is a plumber.”
“A wild possibility you might get fired,” Garelick told his daughter later that month. Your father may be named to the Trump Media Group Board of Directors.
In another letter, Garelick described his potential seat on the DWAC board as a “front row babysitting job” that was “worth it for an unconventional investment like this”.
In an August 2021 filing with the Securities and Exchange Commission, the DWAC told investors that it “[had] No particular objective of the business combination has been set.”
“As a member of the board, Garelick not only had access to information about DWAC’s upcoming merger announcement, but also had a duty to keep that information confidential,” said Gurbir Grewal, SEC enforcement director. “Instead of adhering to his duty as an insider, we allege that Garelick, along with the Shvartsmans, monetized this information to generate more than $20 million in illicit profits.”
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