NEW YORK (AP) — An insider trading trial began Tuesday for a financial executive charged with enabling his boss and others to make millions of dollars illegally on news that an acquisition firm would be taking former President Donald Trump’s media company public.
In an opening statement, Assistant U.S. Attorney Elizabeth Hanft accused Bruce Garelick of tipping off his boss and friends to news in 2021 that the special purpose acquisition company, Digital World Acquisition Corp., was merging with Trump Media & Technology Group.
Defense attorney Jonathan Bach insisted in his opening that Garelick was innocent and did not tip off anyone.
“He did not commit any crime. Bruce is an honest and ethnical man,” Bach told the jury in Manhattan federal court.
Several weeks ago, Garelick's co-defendants — Michael Shvartsman of Sunny Isles Beach, Florida, and his brother, Gerald Shvartsman of Aventura, Florida — pleaded guilty to insider trading charges, admitting that they made over $22 million illegally. They are scheduled to be sentenced on July 17.
Michael Shvartsman owned Rocket One Capital LLC, a venture capital firm, and Garelick, of Providence, Rhode Island, was the company's chief investment officer, though he has primarily worked in the Boston area throughout his career.
The indictment against the men did not implicate Trump, who is seeking the presidency again this year as a Republican, or Trump Media & Technology Group, which owns his Truth Social platform and began trading on the NASDAQ stock market on March 26.
Hanft told the jury Tuesday that Garelick and those he tipped off invested millions of dollars in the securities of the Digital World after they were tipped off that a potential target of DWAC was Trump Media.
When the deal was announced, the defendants sold their securities for $22 million in profits, though Bach noted that his client was only accused of making $49,000 from trades. He asked the jury if it made sense that Garelick would risk a reputation built over decades in the securities business for that amount of money.
“He followed the rules,” Bach said. “Bruce was not part of the same social circles as everybody else who was part of this case. ... He was nobody's close friend or buddy."
Hanft, though, said that Garelick took information he learned as a member of DWAC's board of directors and spread the secrets to others.
She said prosecutors will use witnesses, trading and phone records, along with emails and text messages to prove their case.