SEC Obtains Judgments Against Shvartsman Brothers for Insider Trading

SEC Litigation Releases

Filed January 28th, 2026

Detected February 11th, 2026

Summary

The SEC announced it obtained final consent judgments against Gerald and Michael Shvartsman for insider trading in DWAC securities, resulting in disgorgement of over $22 million. The action also involved parallel criminal proceedings, and the SEC voluntarily dismissed its claims against Rocket One Capital LLC.

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What changed

The Securities and Exchange Commission (SEC) has secured final consent judgments against Gerald and Michael Shvartsman, who were charged with insider trading in DWAC securities. The judgments, entered on January 28, 2026, permanently enjoin the brothers from violating antifraud provisions. Gerald Shvartsman is required to pay disgorgement of $4,640,325.25, and Michael Shvartsman must pay $18,269,042.98, with both amounts deemed satisfied by forfeiture orders in parallel criminal cases. Michael Shvartsman also received an officer and director bar. The SEC voluntarily dismissed its action against Rocket One Capital LLC.

This enforcement action highlights the SEC's continued focus on insider trading. Regulated entities, particularly public companies and their investors, should be aware of the significant financial penalties and bars that can result from trading on material nonpublic information. While the disgorgement amounts here were satisfied by prior criminal forfeiture, the permanent injunctions and officer/director bar have lasting implications for the individuals involved. The SEC's successful prosecution underscores the importance of robust compliance programs to prevent the misuse of MNPI.

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Gerald Shvartsman; Michael Shvartsman; Rocket One Capital LLC

U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 26477 / February 5, 2026

Securities and Exchange Commission v. Bruce Garelick, Michael Shvartsman, Rocket One Capital LLC, and Gerald Shvartsman, No. 23-cv-5567 (PGG) (S.D.N.Y. filed June 29, 2023)

SEC Obtains Final Consent Judgments Against Two Florida Residents Charged with Insider Trading in DWAC Securities

On January 28, 2026, the U.S. District Court for the Southern District of New York entered final judgments against brothers Gerald Shvartsman and Michael Shvartsman in the SEC’s civil enforcement action against them.

The SEC’s complaint, filed on June 29, 2023, alleged that the Shvartsmans purchased securities of Digital World Acquisition Corporation (DWAC) on the basis of material nonpublic information about the progress of DWAC’s merger negotiations with Trump Media & Technology Group Corp. According to the complaint, shortly after the merger was announced, the price of DWAC stock increased, and Gerald Shvartsman and Michael Shvartsman sold their DWAC securities for net profits of $4,640,325.25 and $18,269,042.98, respectively.

The final judgments permanently enjoin the Shvartsmans from further violations of the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The judgment as to Gerald Shvartsman requires him to pay disgorgement of $4,640,325.25, with his obligation to make this payment deemed satisfied by the forfeiture order entered against him in the parallel criminal matter, United States v. Gerald Shvartsman, No. 23-cr-307-LJL (S.D.N.Y.). The judgment as to Michael Shvartsman imposes an officer and director bar and requires him to pay disgorgement of $18,269,042.98, with his obligation to make this payment deemed satisfied by the previous payment of this amount in accordance with the forfeiture order entered against him in the parallel criminal matter, United States v. Michael Shvartsman, No. 23-cr-307-LJL (S.D.N.Y.). The SEC also voluntarily dismissed the action against Rocket One Capital LLC.

The SEC’s litigation was conducted by John Timmer, Andrew McFall of the Enforcement Division’s Market Abuse Unit, and Lindsay S. Moilanen of the SEC’s New York Regional Office and supervised by Melissa Armstrong, Joseph Sansone of the Market Abuse Unit, and Thomas P. Smith, Jr. of the New York Regional Office.