Rep. Devin Nunes, Republican of California, ranking member of the House Intelligence Committee, speaks during an impeachment inquiry hearing in Washington, November 13, 2019.
Andrew Harrer | Bloomberg | Getty Images
Trump Media CEO Devin Nunes on Tuesday urged House Republican committee leaders to investigate possible “illegal manipulation” of the company’s stock.
Nunes, himself a former House Republican chairman, asked them in a letter to investigate the “abnormal trading” of the stocks to assess the extent of the alleged manipulation and “whether any laws, including RICO statutes and tax evasion laws, were violated.”
The request doubles down on Nunes’ claim that Trump Media, which trades under the ticker DJT, is the apparent victim of “naked” short selling, the practice of selling a company’s stock without first borrowing it from this end.
Trump Media, which began trading on Nasdaq on March 26 after completing a lengthy public merger, was by far the most expensive U.S. stock to sell in early April.
Brokers therefore “have a significant financial incentive to lend non-existent stock,” Nunes wrote.
The investigation is necessary to protect the company’s shareholders and to ensure that “perpetrators of any illegal activity can be held accountable,” he wrote.
The CEO addressed the letter to four House committee leaders: Financial Services Chairman Patrick McHenry, R-N.C., Judiciary Chairman Jim Jordan, R-Ohio, Ways and Means Chairman Jason Smith, R -Mo., and Oversight Chairman James Comer, R. -Ky.
Spokespeople for the four presidents did not immediately respond to CNBC’s requests for comment on Nunes’ letter.
The letter comes as the stock price of Trump Media, which created the social media app Truth Social and is majority owned by former President Donald Trump, continues to decline during volatile trading sessions.
DJT soared in its trading debut and reached a high of nearly $80 per share, but it has since lost more than half of that value.
The stock fell nearly 5% Wednesday morning, trading around $30 per share.
Last month’s DJT awards
Nunes’ letter also escalates a feud with Citadel Securities, the capital markets firm founded by Republican megadonor Ken Griffin.
Nunes referenced Citadel Securities in an April 18 letter to Adena Friedman, Nasdaq CEO, warning that DJT “appears on Nasdaq’s ‘Reg SHO Threshold List,’ which indicates illegal trading activity.” He referenced Citadel Securities again in the new letter he sent to Congress.
The Reg, or Regulation, SHO list was designed to monitor short sales and report potentially problematic failures in the delivery of securities to the parties in a transaction. But “there are many justifiable reasons why broker-dealers do not or cannot deliver securities on the settlement date,” the SEC notes on its website.
Nunes told Friedman in his letter that more than 60% of DJT’s stock was traded by just four market participants, including Citadel Securities.
The company responded with a statement calling Nunes “the proverbial loser who is trying to blame ‘naked short selling’ for his stock price drop.”
“Nunes is exactly the kind of person Donald Trump would have shot at (The) Apprentice,” a Citadel Securities spokesperson added in this press release on Friday.
A Trump Media spokeswoman countered: “Citadel Securities, a giant company that has been fined and censured for an incredibly wide range of violations, including issues related to short selling, and which is world famous for screwing over ordinary retail investors at the behest of other companies, is the last company in the world that should be lecturing anyone about “integrity.” »
A representative for Citadel Securities did not immediately respond to a request for comment.
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