An investor in the company that took Donald Trump’s social media startup public will serve 22 months for trading on confidential information about the firm’s merger plans before the deal was announced.
Gerald Shvartsman was sentenced by a federal judge in Manhattan on Wednesday for trading on secret details he had learned about Digital World Acquisition Corp. before the Trump deal was revealed in October 2021.
Shavrtsman is one of three investors in Digital World who were charged by federal prosecutors in Manhattan in June 2023 with making more than $22 million through their trading of Digital World shares. He and his brother Michael pleaded guilty to securities fraud in April, while the other person charged in the case, Bruce Garelick, was found guilty after a jury trial in May. Michael Shvartsman is scheduled to be sentenced on Thursday, while Garelick is slated to learn his fate on Nov. 7. Trump and his company weren’t accused of wrongdoing.
The US had asked US District Judge Lewis Liman to impose a sentence of at least 24 months due to Gerald Shvartsman’s “brazen corruption and greed,” saying he made more than $4.6 million trading on “valuable, confidential information” about the deal and not only misappropriated the information himself but tipped off friends and family.
Defense lawyers had sought a sentence of 18 months on probation, saying “there is nothing in the indictment to suggest that Mr. Shvartsman was a leader or organizer of an extended or sophisticated insider trading ring” and “traded or tipped opportunistically” when he was given inside information by others.