NEW YORK, April 4 (Xinhua) -- Two brothers from Florida Wednesday pled guilty to insider trading involving the merger of a company and former U.S. President Donald J. Trump's Trump Media & Technology Group (Trump Media), according to the U.S. Attorney's Office in the Southern District of New York.

Michael Shvartsman, who ran venture capital firm Rocket One Capital LLC, and Gerald Shvartsman, who owns an outdoor furnishing store in Miami, together made more than 22 million U.S. dollars in illegal profits prior to the announcement of the merger deal in October 2021, said a release by the office in New York on Wednesday.

"Michael and Gerald Shvartsman admitted in court that they received confidential, inside information about an upcoming merger between DWAC and Trump Media and used that information to make profitable, but illegal, open-market trades," said U.S. Attorney Damian Williams.

DWAC refers to Digital World Acquisition Corporation, a special purpose acquisition company.

The two brothers bought millions of dollars of DWAC securities on the open market before the news of the Trump Media business combination was public and they also tipped others about the upcoming merger, inducing further trades in DWAC securities on the basis of the insider information, the release said.

Each one of them pled guilty to one count of securities fraud, which carries a maximum sentence of 20 years in prison.

The two defendants are scheduled to be sentenced on July 17 and their plea agreements recommended a sentence of a few years, according to a report by The New York Times.

Bruce Garelick, who worked at Rocket One and acted as a board member of DWAC, is scheduled to go to trial at the end of April, according to the report.

Garelick played a key role in the insider trading scheme by passing inside information about the merger deal to the Shvartsman brothers.

Besides, the U.S. Securities and Exchange Commission filed a parallel civil action against Garelick, the Shvartsman brothers and Rocket One Capital in June 2023.

The insider-trading investigation contributed to the delay of the merger deal, which just concluded on March 25, 2024.

Statistics show that the price of DWAC shares surged to over 90 U.S. dollars in October 2021 shortly after the floating of its shares at around 10 dollars per share.

The price of DWAC, which was renamed as Trump Media following the completion of the merger, jumped to nearly 80 dollars recently from less than 20 dollars per share at the beginning of 2024.

However, Trump Media, which was seen as a meme stock, fell back to around 50 dollars per share amid profit-taking and poor operating results.

Trump Media reported a loss of 58.2 million dollars in 2023 with only 4.1 million dollars of revenues in the year, according to the annual fiscal report released on Monday. Enditem

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