In a letter sent on April 23, Trump Media & Technology Group (TMTG) CEO Devin Nunes requested that several House committees investigate what the company claims is "potential manipulation" of its stock, which trades under the ticker DJT. Nunes, a former Republican congressman from California, asked the House Committee on the Judiciary, the Committee on Financial Services, the Committee on Ways and Means, and the Committee on Oversight and Reform to open an investigation into the "anomalous trading" of DJT shares.

Nunes has previously alleged that TMTG's stock has been targeted by unscrupulous investors since it went public in late March. Earlier this month, he reached out to the Nasdaq stock exchange, where DJT trades, seeking assistance in examining possible incidents of "naked" short selling. This practice, which involves shorting a stock without borrowing the shares first, is banned in the U.S. due to its potential to destabilize prices.

In his letter to House Republican committee leaders, Nunes referred to "naked" short selling as a move that often benefits sophisticated market participants at the expense of retail investors. Trump Media shares have experienced significant fluctuations since their debut on March 26. After initially surging to a high of $79.38 per share, the stock dropped to as low as $22.55 per share on April 16. Currently, the shares have rebounded, rising 4.2% to $33.95 in Wednesday afternoon trading.

Short selling is a legal practice in which investors borrow shares they anticipate will decline in price, sell them on the market, and then purchase them back at a lower price to return to the trading firm, pocketing the difference. However, "naked" short selling skips the step of borrowing shares, meaning that investors sell shares they don't actually own and buy them later to cover their positions. This tactic can lead to significant declines in a company's stock price and undermine market confidence.

Nunes also mentioned in the letter "data made available to us" which indicates that four companies have accounted for 60% of the "extraordinary volume of DJT shares traded." Trump Media, primarily focused on its social media platform Truth Social, has drawn comparisons to "meme" stocks like GameStop. These stocks often attract individual investors based on social media chatter rather than traditional financial metrics.

According to Nunes, an investigation into the potential naked short selling of DJT's shares is necessary to protect shareholders, including TMTG's retail investors. The CEO suggested that the investigation may also highlight the need for policy changes, such as enhanced documentation requirements for brokers locating and borrowing stocks, along with stricter penalties for illegal naked short sellers. The outcome of this investigation could have significant implications for the future trading of TMTG's stock and the broader market.

It remains to be seen how lawmakers will respond to Nunes' request and whether a formal investigation will be initiated. Nonetheless, the allegations of potential stock manipulation surrounding TMTG's DJT shares could have far-reaching consequences and may prompt discussions regarding regulatory measures within the financial industry.