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Trump Media Urges SEC to Investigate UK Hedge Fund for $105 Million Short Position

Trump Media & Technology Group, the company behind former President Donald Trump’s Truth Social platform, has formally requested the Securities and Exchange Commission (SEC) to launch an immediate investigation into Qube Research & Technologies. The British hedge fund recently disclosed a $105 million short position against the company’s stock.

In a memo sent to the SEC on Thursday, Trump Media characterized the significant bet against its shares as “suspicious” and potentially constituting “market manipulation.” The company raised concerns about Qube’s disclosure practices, noting that the hedge fund only revealed its approximately six million-share short position in a German regulatory filing despite Trump Media trading on the Nasdaq exchange in the United States under the symbol DJT.

“Neither Nasdaq, NYSE Texas, nor any other source has been able to confirm when the trades disclosed by Qube were conducted or if they were conducted at all,” the memo stated, highlighting the company’s concerns about transparency in the transactions.

Trump Media further pointed to a pattern of what it considers questionable trading activity surrounding its stock. “The above factors, especially when combined with the history of suspicious trading surrounding DJT stock — including DJT appearing on Nasdaq’s Regulation SHO Threshold Security List continuously for more than two months in 2024 — could be indications of the illegal naked short selling of DJT shares,” the company asserted.

Naked short selling occurs when an investor sells shares without first borrowing them or ensuring they can be borrowed. This practice, which is illegal in the United States, can artificially drive down a company’s stock price and create a misleading market perception.

Reuters first reported Qube’s substantial short position on Monday, based on information found in Germany’s Gazette Bundesanzeiger and identified by research firm Breakout Point. According to these findings, Qube’s position represents approximately 2.53% of Trump Media’s total shares available for trading.

The significant short position comes at a time when Trump Media maintains a market valuation of $4.49 billion as of Thursday, with President Trump’s trust controlling a majority 53% stake in the company.

In its memo to the SEC, Trump Media expressed strong concerns about market integrity, stating: “American equities exchanges should be operated with full transparency and maximum efficiency, not as an opaque free-for-all reminiscent of a third-world casino.”

The dispute highlights ongoing tensions in the financial markets regarding disclosure requirements for short positions and the regulatory differences between U.S. and international markets. While the United States has strict regulations on short selling, disclosure requirements can vary significantly across different jurisdictions, potentially creating regulatory gaps that sophisticated investors might exploit.

The SEC has previously shown interest in enhancing transparency around short selling. In 2021, the regulator proposed rules that would increase disclosure requirements for short sellers, though these rules have yet to be fully implemented.

Trump Media’s public challenge to Qube’s position comes amid volatile trading in its stock since the company went public through a SPAC merger in March 2023. The stock has experienced significant price swings, attracting attention from both retail investors supporting the former president and institutional investors taking various positions on the company’s long-term prospects.

As of Thursday, the SEC had not publicly responded to Trump Media’s request for investigation. Qube Research & Technologies, which manages approximately $10 billion in assets, has also not issued a public statement addressing Trump Media’s allegations.

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8 Comments

  1. This is an important issue that deserves a thorough, impartial investigation by the SEC. Transparency and integrity in the markets must be upheld.

    • Jennifer G. Thomas on

      Well said. Maintaining public trust in the financial system is critical, so the SEC needs to get to the bottom of this.

  2. I hope the SEC can get to the bottom of these allegations quickly. Investors need to feel confident that the markets are operating fairly and without manipulation.

  3. Elizabeth Williams on

    Interesting allegations of potential stock manipulation here. It’s important the SEC investigates thoroughly to ensure fair and transparent markets for all investors, regardless of political affiliations.

    • Agreed, the SEC should look into this thoroughly and without bias. Transparency is key for maintaining trust in the markets.

  4. Liam U. Martin on

    Curious to see what the SEC uncovers in their investigation. Short positions can be legitimate, but any undisclosed or manipulative practices should be addressed.

  5. As an investor, I’m concerned about potential market manipulation. The SEC probe will hopefully provide clarity and ensure a level playing field for all participants.

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