2024-04-20 01:43:51
(Keystone-ATS) Former US President Donald Trump’s Trump Media and Technology Group (TMTG) warned the Nasdaq electronic exchange on Friday, accusing hedge funds of manipulating the market to drive down share prices using an illegal mechanism.
Between its IPO on March 26 and Tuesday, TMTG’s price collapsed by more than 70%, before retreating by more than 60% in the last three sessions of the week.
On Tuesday, TMTG published an educational document that answers a series of questions that shareholders of Donald Trump’s media group, whose main asset is the social network Truth Social, may ask. In particular, he advised them to prevent their securities from being lent to speculators who would like to bet on the fall in prices.
This mechanism, called short selling, involves borrowing a share and then selling it. Second, the speculator buys back a security from the same company, then gives it to the person or company he borrowed it from.
“Naked” short sale
If the stock price has fallen in the meantime, the speculator has bought back the stock for less than the price he sold it for, allowing him to make a profit.
The CEO of TMTG, Devin Nunes, a Republican member of the House of Representatives from 2003 to 2022, sent a letter to Nasdaq expressing concern regarding the possible practice called “naked” short selling.
This technique, which the US market regulator (SEC) took action once morest in 2005 and 2008, consists of promising to sell a security without having previously borrowed it. It makes it possible to increase short sales, which are no longer limited to the number of shares available.
Devin Nunes calls out “possible market manipulation” on this basis and notes that among the companies most active in trading TMTG stock are two alternative investment firms or “hedge funds”, namely Citadel Securities and Jane Street Capital.
“Devin Nunes is a proven ‘loser’ who tries to blame the stock’s decline on naked short selling,” Ken Griffin, the influential head of Citadel, responded in a statement to multiple media outlets.
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