US prosecutors charged three men with insider trading on Thursday, alleging that they illegally traded shares in blank-check companybefore it disclosed a plan to merge with former president Donald Trump's social-media group.
Rocket One Capital CEO Michael Shvartsman, his brother Gerald Schvartsman, and CIO Bruce Garelick made $22 million selling DWAC shares days after the merger announcement caused the stock to quadruple in price, the Department of Justice said in anThe three men each face between five and seven charges of fraud and conspiracy, which could land them decades-long prison sentences if they're convicted.
The three men then allegedly started loading up on DWAC shares, passed on their knowledge of the looming deal to others, and then dumped all their holdings within two days of the planned merger being announced on October 20, 2021. DWAC and Trump Media, which owns and operates the Truth Social app, still haven't merged more than 18 months on, with the viability of SPAC deals plunging since the Federal Reserve started to aggressively raise interest rates in March 2022.
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