(Reuters) -Shares of Donald Trump’s media and technology company rose more than 3% on Friday after it asked the Nasdaq stock exchange to help prevent alleged market manipulation of its shares by so-called “naked” short sellers.
Trump Media & Technology Group wrote to Nasdaq CEO Adena Friedman, warning the exchange of “potential market manipulation” in the stock, it announced Friday in a filing with the Securities and Exchange Commission.
Trump Media shares have been highly volatile, hovering at nearly half their March 26 debut closing price of $57.99 in recent days.
In the letter, Trump Media CEO and former Congressman Devin Nunes suggested that “naked” short-selling was to blame.
Short selling involves borrowing a stock to sell in the expectation that the price will fall, then buying the stock back and pocketing the difference.
“Naked” short selling, which is generally illegal in the United States, involves selling shares without first borrowing them or establishing that they can be borrowed, creating the risk that the seller will be unable to deliver the shares.
“Reports indicate that DJT was ‘by far’ the most expensive U.S. stock to short as of April 3, 2024, meaning brokers have a significant financial incentive to lend out non-existent shares,” Nunes said in the letter. an April 3 CNBC report.
He provided no evidence of naked short selling, but noted that DJT was on Nasdaq’s Reg SHO threshold list as of April 17, which he said is “indicative of unlawful trading activity.”
That list includes securities that have not been settled for five consecutive settlement days, which could indicate naked short-selling or administrative or technical problems.
Nunes did not accuse any specific companies or individuals of naked short selling, but noted that “data made available to us indicates that just four market participants have been responsible for more than 60% of the extraordinary volume of DJT shares traded: Citadel Securities , Virtu Americas, G1 Execution Services and Jane Street Capital.”
A spokesperson for market maker Citadel said Nunes tried to blame “naked short selling” for his falling share price, adding that integrity was at the heart of everything Citadel does.
Virtu Americas, G1 Execution Services and Jane Street Capital did not immediately comment.
Nasdaq did not immediately respond to a Reuters request for comment.
A Nasdaq spokesperson told CNBC that the exchange is “committed to the principles of liquidity, transparency and integrity in all of our markets.”
“We have long championed transparency in short selling and have been an active supporter of the SEC’s rules and enforcement efforts designed to monitor and prohibit naked short selling,” the spokesperson said.
