Trump’s Media Firm Calls for Federal Investigation into Short-Selling Opponents

Trump’s Media Firm Calls for Federal Investigation into Short-Selling Opponents

In a dramatic escalation of its battle against Wall Street critics, Trump Media & Technology Group (TMTG) has formally requested a federal probe into a financial firm that profited from short-selling its stock. The company, which owns Truth Social, alleges potential market manipulation and seeks regulatory intervention to scrutinize trading activities that have impacted its share price. The move highlights growing tensions between the conservative media platform and financial institutions betting against its success.

Allegations of Market Manipulation Surface

TMTG’s request, filed with the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA), centers on accusations that certain hedge funds engaged in “predatory” short-selling tactics. Short-selling involves borrowing shares to sell them, hoping to buy them back later at a lower price. While legal, the practice has drawn scrutiny when perceived as artificially driving down stock values.

According to regulatory filings, TMTG’s stock (DJT) has experienced significant volatility since its March 2024 debut, with short interest briefly exceeding 60% of float shares in April. The company claims this activity reflects a coordinated effort to undermine its valuation. “When you see this level of concentrated short interest, it raises legitimate questions about whether market participants are playing by the rules,” said financial analyst Rebecca Cho of Bernstein & Co.

The Broader Context of Financial Feuds

This dispute occurs against a backdrop of increasing political polarization in financial markets. TMTG, which merged with Digital World Acquisition Corp. to go public, has positioned itself as a conservative alternative to mainstream social media. Its market performance has become a flashpoint, with supporters viewing short-sellers as ideological opponents rather than neutral investors.

Market data reveals:

• DJT shares peaked at $79.38 in March before falling to $22.80 in June
• Short interest represented 18.7 million shares as of July 15
• Average daily trading volume exceeded 12 million shares during volatile periods

“This isn’t just about one company,” noted Georgetown University finance professor Mark Williams. “We’re seeing growing tension between populist business models and traditional Wall Street mechanisms. The outcome could influence how regulators view activist short-selling.”

Differing Perspectives on Market Integrity

Supporters of TMTG’s position argue that aggressive short-selling can create self-fulfilling prophecies. “When negative sentiment is amplified through derivatives and options trading, it can distort true market value,” explained former SEC attorney Linda Harris. However, critics counter that the company is blaming external factors for its own challenges.

Short-selling advocates maintain their activities provide market balance. “Short sellers often uncover fraud or overvaluation that others miss,” said Citron Research founder Andrew Left, whose firm was not named in TMTG’s complaint. “Calling for investigations when stocks fall is becoming a dangerous trend that could chill legitimate market analysis.”

Regulatory Precedents and Potential Outcomes

The SEC has previously investigated short-selling patterns during volatile market periods. In 2021, the agency implemented new reporting requirements for short positions after the GameStop trading frenzy. However, proving illegal manipulation requires demonstrating coordinated action with intent to deceive—a high legal threshold.

Possible outcomes include:

• SEC review of trading patterns in DJT options and equity markets
• Increased disclosure requirements for specific hedge funds
• No action if regulators find insufficient evidence of wrongdoing

Former FINRA disciplinary officer Sarah Jensen cautions: “Regulators walk a fine line between policing misconduct and avoiding perception of political interference. This case will test that balance.”

Implications for Media and Financial Markets

The controversy underscores how media companies with political affiliations face unique market pressures. Unlike traditional media firms judged primarily on financial metrics, TMTG’s valuation partly reflects ideological support—a factor that complicates conventional analysis.

Market strategists identify three potential scenarios moving forward:

1. Regulatory action that temporarily stabilizes the stock price
2. Continued volatility as the company builds its business fundamentals
3. Increased retail investor mobilization against short sellers

As this unfolds, investors are advised to monitor SEC filings and congressional reactions. House Financial Services Committee Chair Patrick McHenry has already signaled plans to examine “market fairness issues,” suggesting the debate may extend beyond regulatory agencies.

For those tracking this developing story, subscribing to SEC enforcement alerts and reviewing FINRA arbitration cases can provide timely updates on how financial watchdogs respond to these unprecedented challenges at the intersection of media, politics, and market regulation.

See more Business Focus Insider Team