A former board member of Digital World Acquisition Corporation (NASDAQ: DWAC), a special-purpose acquisition corporation (SPAC), has been indicted for trading in advance of a merger agreement with the Trump Media & Technology Group, a media company founded by former U.S. President Donald Trump.

Bruce Garelick, a former Digital World board member, was indicted by the U.S. Justice Department for insider trading alongside two associates, Michael Shvartsman and Gerald Shvartsman. The U.S. Securities and Exchange Commission (SEC) also filed separate insider trading cases against the trio.

• Digital World Acquisition Corporation is a SPAC formed solely to merge with an existing business. It raised $250mn in a share offering in September 2021.

• Ex-President Donald Trump founded the Trump Media & Technology Group in February 2021. In October 2021, the media group agreed to merge with DWAC and become a publicly-traded company. The merger hasn’t been completed.

DWAC board member Garelick received information about a potential merger with Trump Media; he signed a non-disclosure agreement. But, according to prosecutors, Garelick violated his non-disclosure agreement and revealed the potential merger to Michael Shvartsman, his boss at an investment firm. Michael allegedly passed the information to his brother, Gerald.

According to prosecutors, the trio purchased DWAC media stock based on the material non-public information and sold them after the Trump Media merger was revealed to the public. They allegedly realized $23mn in profits from their trades. Garelick is also alleged to have not filed his insider transactions with the SEC despite being obliged to do so as a board member.

• Garelick was charged with six securities fraud counts and one conspiracy count.

• Michael Shvartsman was charged with six securities fraud counts and one conspiracy count.

• Gerald Shvartsman was charged with four securities fraud counts and one conspiracy count.

The three defendants were arrested Thursday and granted bail after same-day court appearances. Trial dates have not yet been set.

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