Truth Social owner Trump Media asks Congress to investigate ‘troubling’ market manipulation claims

By Matt Egan, CNN

New York (CNN) — Trump Media & Technology Group is asking Congress to investigate its suspicions that illegal activity is driving down its share price.

In a letter disclosed on Wednesday, Devin Nunes, the CEO of Truth Social owner Trump Media (DJT), alerted the GOP Chairmen of the House Ways and Means, Judiciary, Financial Services and Oversight Committees to the “urgent matter” of “potential manipulation” of the company’s share price.

“We assess there are strong indications of unlawful manipulation of DJT stock,” Nunes wrote in the letter.

Nunes, himself a former Republican congressman from California, pointed to how Trump Media has been among the most expensive stocks to borrow. Traders who wish to short a stock, or bet the value will go down, must borrow shares elsewhere first.

Nunes suggested there are signs of “naked” short selling, which involves someone selling shares they don’t own or have not borrowed.

“This is particularly troubling given that ‘naked’ short selling often entails sophisticated market participants profiting at the expense of retail investors,” the Trump Media CEO wrote.

However, some experts expressed skepticism about the claims of market manipulation.

“It does not appear that there is any evidence that these allegations are true,” Jonathan Macey, a professor at Yale Law School, told CNN in an email.

Jay Ritter, a finance professor at the University of Florida, said there are more obvious explanations for why some traders are betting against Trump Media.

“The reason that short sellers want to short the stock is because the stock is overvalued,” said Jay Ritter, a finance professor at the University of Florida. “It does not require a PhD in finance to come to the conclusion that the stock is wildly overvalued and is almost certain to fall in price.”

Trump Media recently reported losing $58 million in 2023 on very little revenue. The company’s price-to-sales ratio – a common way to value stocks – is off the charts when compared with rival social media companies.

Since peaking at $66 in late March, Trump Media’s share price has lost more than half its value.

In the letter to Congress, Trump Media said data indicates “just four market participants have been responsible” for more than 60% of the extraordinary volume of the company’s stock: Citadel Securities, Virtu Americas, G1 Execution Services and Jane Street Capital.

However, Ritter notes that Citadel Securities and Jane Street are among the most active market makers in almost every stock traded in America. “The statement applies to almost every stock,” he said.

Last week, Nunes wrote a letter to Nasdaq, where Trump Media shares trade, alerting the exchange to concerns about market manipulation. That letter similarly mentioned Citadel Securities, the firm founded by Republican billionaire donor Ken Griffin.

Citadel Securities fired back at Trump Media last week, telling CNBC in a statement: “Devin Nunes is the proverbial loser who tries to blame ‘naked short selling’ for his falling stock price.” The Citadel spokesperson added: “If he [Nunes] worked for Citadel Securities, we would fire him.”

Citadel Securities did not respond to a request for comment on the new Trump Media letter.

This story has been updated with additional context and quotes.

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