Financial Services, April 20 (Editor: Niu Zhanlin) On Friday EST, Trump Media Technology Group (DJT) sent a letter to NASDAQ questioning suspected illegal short selling of the company's shares and requesting regulators to intervene in the investigation.

The social media company sent a letter to Nasdaq CEO Adena Friedman asking the latter to ensure that market makers comply with regulations to prevent “naked short selling,” and claimed that there was evidence of “market manipulation.”

Subsequently, Nasdaq issued a statement saying that NASDAQ is committed to the principles of liquidity, transparency, and integrity in all markets, has long advocated transparency in short selling, and actively supported the US Securities and Exchange Commission (SEC) rules and enforcement efforts prohibiting naked short selling.

In Friday's intraday session, against the backdrop of a sharp decline in the market, Trump media rose 7% to $35.5, but this is far from the previous high of $79.

Analysts said that one of the reasons for the recent fall in Trump Media's stock price is insufficient. People are generally skeptical about its business prospects because the company's revenue last year was only 4 million US dollars and losses were more than 50 million US dollars. The market capitalization of up to $8 billion triggered a wave of shorting. Of course, investors also took into account Trump's legal difficulties.

Generally speaking, short sellers can profit by legal means: they borrow stocks they want to short and then sell them on the market. If the stock price falls, then buy back the shares, short sellers return these shares to their original owners, and ultimately profit from the price difference. Short selling has a high risk because theoretically there is no upper limit to the increase in stock prices, and short sellers may face the risk of unlimited losses.

However, the US market prohibits naked short selling; that is, investors sell stocks that do not exist at all on the market without borrowing stocks in advance or determining that stocks can be borrowed, and then buy back the stocks to make a profit when the stock falls further.

Trump media said it wants Nasdaq to ensure that market makers comply with rules requiring brokers to disclose their “net short” positions and prevent lending stocks that don't actually exist.

Trump Media CEO Devin Nunes said in the letter: “This is particularly disturbing considering that bare selling often involves savvy market participants profiting at the expense of retail investors.”

A representative of the brokerage firm Citadel Securities denied Trump's media claims and criticized Nunes for trying to blame the fall in stock prices on bare short sales.

On Wednesday, the company also updated a short selling prevention reminder on its official website to specifically guide shareholders on how to prevent their shares from being loaned to short sellers for trading. “Brokerage firms promote short selling and earn revenue by lending Trump Media shares held in shareholders' margin accounts. Falling stocks are profitable for short sellers and brokerage firms, but not good for the company's shareholders.”