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Billionaire Ken Griffin’s Citadel Securities has called the former congressman who runs Donald Trump’s media business a “loser” after he named the powerful trading firm in a letter suggesting that an illegal form of short selling was responsible for its plummeting stock price.
Devin Nunes, chief executive of Trump Media & Technology Group, wrote to the head of the Nasdaq exchange this week “to bring your attention to potential market manipulation” of the company’s stock, according to a filing on Friday.
Nunes, a former Republican congressman, named four equities market makers in his letter: Citadel Securities, Virtu, Jane Street and G1 Execution Services. Without accusing any of them of manipulation, Nunes asked Nasdaq what steps it could take to “foster transparency and compliance by ensuring market makers are adhering to” US securities rules.
The letter raised concerns about so-called naked short selling, where fund managers make bets on stock falls without borrowing them in advance. Naked short sales have been banned in the US since 2005.
G1 declined to comment. Virtu and Jane Street did not immediately respond to requests for comment.
Citadel Securities, whose founder Griffin is a mega donor to Republican candidates, including Nikki Haley, who ran and lost against Trump in the 2024 primary election, offered a blistering response.
“Devin Nunes is the proverbial loser who tries to blame ‘naked short selling’ for his falling stock price,” the Miami-based market maker said. “Nunes is exactly the type of person Donald Trump would have fired on The Apprentice. If he worked for Citadel Securities, we would fire him, as ability and integrity are at the centre of everything we do.”
TMTG replied: “Citadel Securities, a corporate behemoth that has been fined and censured for an incredibly wide range of offenses including issues related to naked short selling, and is world famous for screwing over everyday retail investors at the behest of other corporations, is the last company on earth that should lecture anyone on ‘integrity.’”
Trump Media went public through a merger with a blank-cheque company late last month. While shares initially surged — boosting the former president’s paper wealth by billions of dollars — they have since slumped. On Friday the company was trading at $33.92 after soaring over the past two days, but the price remains well below its intraday peak of $79.38.
Data from S3 Partners shows TMTG is the third-most expensive US stock to borrow for short sales among companies with more than $25mn of short interest, behind cannabis group Canopy Growth and electric-car company Canoo.
Because TMTG has become relatively expensive to short, or bet against, “brokers have a significant financial incentive to lend non-existent shares”, Nunes said. Trump Media said it had appeared on a Nasdaq list where shares were not delivered on time to clear trades. One cause of such failures could be “naked” short selling.
“Nasdaq is committed to the principles of liquidity, transparency and integrity in all our markets,” the exchange said. “We have long been an advocate of 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.”
Nunes invoked harm against small investors who have flocked to Trump Media despite widening losses. Naked short selling “often entails sophisticated market participants profiting at the expense of retail investors”, he wrote.
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TMTG this week updated its website to include tips for “long-term shareholders who believe in the company’s future” on how to prevent their shares from being lent for a short interest position.
A growing number of small companies have blamed naked shorting for share price falls, even though data does not suggest an overall rise in bets on falling stock prices.
At least 70 groups last year discussed the issue with shareholders, more than three times the number who mentioned it in 2022, according to a Financial Times analysis of corporate filings and announcements via transcript analysis firm AlphaSense.
Several of those went on to hire specialists to probe trading records, while some launched legal action. A September study by Nasdaq chief economist Phil Mackintosh found that shorting activity hadn’t increased noticeably compared with earlier years.
Trading volume for TMTG, which last month merged with Digital World Acquisition Corp, was double its 20-day average early on Friday, according to Bloomberg data. Trump is by far the company’s largest shareholder.
With additional reporting by Alex Rogers in Washington