Trump Media CEO David Nunes wrote a formal letter to the Nasdaq, claiming that the company appears to be the victim of naked short selling. Data show that there are a lot of unresolved short trades on the market at this time.
Trump Media and Technology CEO Devin Nunes sent a formal letter to Nasdaq CEO Adena Friedman on Friday April 19. Nunes claims in the letter that Trump Media is possibly being targeted for market manipulation by at least four companies.
Nunes alleges that shares of the social media company, traded under the ticker DJT, have been the target of short selling. This is when an investor makes a bet shares will fall. The former president is the largest single shareholder in the company.
Devin Nunes came to nationwide attention as an outspoken Chairman of the House Intelligence Committee. As a representative from the state of California, he voted in line with President Trump’s stated position 96.2% of the time, and was known, as the Los Angeles Times put it, as someone who "parroted the president’s conspiracy theories".
Citadel, in a statement to FOX Business, said: "Devin Nunes is the proverbial loser who tries to blame ‘naked short selling’ for his falling stock price. Nunes is exactly the type of person Donald Trump would have fired on ‘The Apprentice.’ If he worked for Citadel Securities, we would fire him, as ability and integrity are at the center of everything we do."
What is short selling?
Short selling is an investing technique in which the investor bets that the price of an equity will fall. The investor borrows shares in that company, and promises to return the shares in a certain amount of time. The shares are then sold. The investor then buys the needed number of shares to cover the position and pockets the difference if the new stock price is lower than when the shares were sold. However, if the stock price rises, the investor must pay the difference between the two prices.
When a stock becomes a popular short, those lending the equities might put a premium or charge fees for lending. Shortly after the Trump Media stock became available, it became the most expensive stock to short in America because of the fees attached to the transaction.
Naked short selling differs from short selling differs from other forms when the investor does not have access to a supply of stocks to cover the volume that must be returned. Naked short selling has been illegal in the United States since 2005 with the introduction of Regulation SHO.
