Bare-Knuckle Finance: The Fight to Stop Naked Short Selling
How Devin Nunes and Terry Lynch Are Battling a Financial Predator to Save Small Companies
Naked short selling—a financial practice as shadowy as it sounds—has emerged as a contentious issue, with accusations flying that it’s kneecapping smaller companies and rigging the market against retail investors. Devin Nunes, CEO of Trump Media & Technology Group (TMTG), which operates Truth Social, has thrust this issue into the spotlight, alleging that his company’s stock (DJT) is a prime target. With whistleblowers reportedly stepping forward, Nunes is rallying Congress, state attorney generals, and even invoking the RICO statute to combat what he calls a systemic problem. Meanwhile, crusaders like Terry Lynch of Save Canadian Mining are waging a parallel battle, estimating billions in losses for small-cap firms. But is naked short selling the market’s great villain, or are critics like Citadel Securities right to call these claims a scapegoat for poor performance? Buckle up as we dive into the murky world of stock manipulation, its devastating effects, and the high-stakes fight to stop it.
What Is Naked Short Selling, and Why Does It Matter?
Naked short selling is the practice of selling shares you haven’t borrowed or don’t own, essentially flooding the market with phantom shares. Unlike legal short selling, where traders borrow shares to sell and later buy them back (hoping for a price drop), naked shorting skips the borrowing step, which is often illegal in the U.S. and Canada. The result? Artificial downward pressure on stock prices, diluted shareholder value, and a market that feels like a rigged casino for retail investors.
The Securities and Exchange Commission (SEC) notes that while appearing on the Regulation SHO threshold list—indicating failed trade deliveries—doesn’t always mean illegal activity, persistent failures can signal naked shorting. For smaller companies, the impact is brutal: depressed stock prices make it harder to raise capital, fund projects, or even survive. A 2024 report by Save Canadian Mining pegs the damage at $40 billion for Canadian junior mining firms alone, with losses potentially exceeding $500 billion across small-cap sectors globally. This isn’t just a Wall Street game—it’s a wrecking ball for innovation and economic growth.
Devin Nunes and Trump Media: The Poster Child for Naked Short Selling?
Devin Nunes, the former California congressman turned TMTG CEO, has been sounding the alarm on naked short selling since April 2024, when he fired off a letter to Nasdaq CEO Adena Friedman, alleging “potential market manipulation” of DJT stock. Nunes pointed to DJT’s consistent appearance on Nasdaq’s Reg SHO threshold list since April 2, 2024, as evidence of “unlawful trading activity.” He also noted that DJT was the “most expensive stock to short” in U.S. markets, suggesting brokers had incentives to lend non-existent shares, profiting at the expense of retail investors.
By May 2024, Nunes escalated his campaign, urging top House GOP lawmakers—chairs of the Judiciary, Financial Services, Ways and Means, and Oversight committees—to investigate “anomalous trading” and potential violations, including RICO statutes and tax evasion laws. He named four firms—Citadel Securities, VIRTU Americas, G1 Execution Services, and Jane Street Capital—as responsible for over 60% of DJT’s trading volume, hinting at coordinated manipulation.
In a recent statement, Nunes claimed whistleblowers are coming forward, revealing a problem “bigger than what most of us imagined.” He suggested that naked short selling may have plagued other companies for over a decade, with TMTG poised to “break it out into the open.” An X post from May 14, 2025, by @AGORACOM amplified this, quoting Nunes’s video statement about exposing a massive issue. While details on these whistleblowers remain sparse, their emergence could signal new evidence, potentially fueling Nunes’s push for congressional and state-level action.
Nunes’s rhetoric is bold, but it’s not without pushback. Citadel Securities, a frequent target, fired back in April 2024, calling Nunes a “proverbial loser” blaming naked short selling for DJT’s falling price, which dropped from over $70 at its March 2024 debut to around $36 by April. Citadel argued that TMTG’s financial woes—$401 million in losses in 2024 against $4.1 million in revenue—are the real culprit. TMTG retorted, slamming Citadel’s history of fines for naked shorting-related offenses.
The Broader Impact: Small Companies Under Siege
Naked short selling isn’t just a Trump Media problem—it’s a systemic issue hammering small-cap companies, particularly in resource-heavy sectors like mining. The practice artificially inflates share supply, driving down prices and eroding investor confidence. For junior firms, which rely on stock offerings to fund exploration or development, this can be a death sentence. Projects stall, jobs vanish, and entire industries suffer.
Save Canadian Mining, led by CEO Terry Lynch, has been a vocal advocate for reform. Their 2024 study estimates that naked short selling has wiped out $40 billion in value from Canadian junior miners, with broader small-cap losses potentially reaching $500 billion. Lynch argues that the removal of the “tick test” in 2012—a rule requiring short sales to occur on an uptick in price—opened the floodgates for unchecked shorting. The result is a market where small companies are “short and distort” targets, with predators betting against them while spreading negative narratives.
Lynch’s group, backed by industry heavyweights like Eric Sprott and Rob McEwen, is pushing for regulatory changes, including reinstating the tick test and tightening enforcement. They’re also preparing a billion-dollar class-action lawsuit against brokers facilitating illegal shorting, aiming to hold Wall Street accountable. This fight parallels Nunes’s efforts, suggesting a growing coalition against market manipulation.
Whistleblowers, Congress, and RICO: Nunes’s Multi-Pronged Attack
Nunes’s strategy is aggressive and multi-faceted. Beyond his Nasdaq letter, he’s leveraged his congressional ties to demand investigations. In May 2024, he called for probes into eight firms, including Apex Clearing and Clear Street, seeking trading data from the SEC’s Consolidated Audit Trail, FINRA, and the Depository Trust and Clearing Corporation. He’s also floated the RICO statute, typically used against organized crime, as a legal weapon against alleged manipulators.
The whistleblower angle adds intrigue. While Nunes hasn’t named sources, his claim that “people are coming outta the woodwork” suggests insider knowledge of market practices. This could bolster his case, especially if whistleblowers provide concrete evidence of coordinated shorting. However, a separate whistleblower complaint against Nunes himself, reported by ProPublica in October 2024, complicates the narrative. That complaint, representing “over half” of TMTG’s staff, accused Nunes of mismanagement, hiring foreign contractors, and exposing the company to regulatory risks—charges TMTG denied as “false and defamatory.”
Nunes has also reached out to state attorney generals, arguing that naked short selling’s damage to capital formation warrants their attention. This aligns with broader anti-corruption efforts, as seen in a 2022 National Association of Attorneys General forum where state AGs discussed public integrity prosecutions. While no specific AG actions on naked shorting have been confirmed, Nunes’s call could gain traction if evidence mounts.
The Critics: Is Naked Short Selling a Scapegoat?
Not everyone buys Nunes’s narrative. Citadel Securities and others argue that DJT’s stock slide reflects TMTG’s shaky fundamentals, not manipulation. The company’s $401 million loss in 2024, coupled with Nunes’s $47 million compensation package, has fueled skepticism. Critics like The New Republic have mocked Nunes’s complaints, with Citadel quipping he’d be fired for incompetence if he worked for them.
The SEC itself cautions that Reg SHO listings don’t always indicate illegal activity, as trade failures can have legitimate causes. This ambiguity fuels the debate, with some analysts arguing that TMTG’s high short interest reflects market sentiment, not a conspiracy. Still, the persistence of DJT on the threshold list—every day since April 2, 2024—lends credence to Nunes’s concerns, as does the broader pattern of small-cap struggles.
Terry Lynch and Save Canadian Mining: A Parallel Crusade
While Nunes fights for TMTG, Terry Lynch and Save Canadian Mining are tackling naked short selling’s toll on Canada’s junior mining sector. Since 2019, Lynch has rallied support from industry leaders, arguing that unchecked shorting has crippled capital formation. His group’s 2024 report quantifies the damage: $40 billion in direct losses, with ripple effects across supply chains and communities.
Lynch’s solutions are bold. Beyond pushing for the tick test’s return, Save Canadian Mining is preparing a class-action lawsuit to target brokers enabling naked shorting. Backed by investors like Eric Sprott, the group aims to force systemic change, much like Nunes’s congressional and legal efforts. Their shared goal: a market where small companies can compete without being shorted into oblivion.
The Road Ahead: Can Nunes and Lynch Win?
The fight against naked short selling is heating up, with Nunes and Lynch as unlikely allies. Nunes’s whistleblower claims, if substantiated, could expose a scandal “bigger than imagined,” potentially reshaping market regulation. His work with Congress and state AGs, combined with RICO threats, signals a no-holds-barred approach. Meanwhile, Lynch’s data-driven campaign and looming lawsuit offer a complementary front, grounding the issue in hard numbers.
But challenges remain. TMTG’s financial struggles and Nunes’s own whistleblower controversy muddy the waters, while critics argue that market dynamics, not manipulation, drive stock declines. Regulatory inertia is another hurdle—despite years of complaints, naked shorting persists, with enforcement often lagging. Still, the growing chorus of voices, from whistleblowers to industry leaders, suggests momentum is building.
Conclusion: A Market at a Crossroads
Naked short selling is more than a Wall Street buzzword—it’s a practice that’s bleeding small companies dry, from Trump Media to Canada’s junior miners. Devin Nunes’s high-profile battle, fueled by whistleblower revelations and congressional muscle, is shining a light on this dark corner of finance. Terry Lynch’s Save Canadian Mining, with its staggering loss estimates and legal ambitions, is proof that the problem transcends borders. Whether they’re exposing a grand conspiracy or tilting at windmills, one thing’s clear: the fight against naked short selling is a fight for the little guy in a market stacked against them. As Nunes put it, “We’re gonna make sure people know about it.” And with billions on the line, the world is watching.
Sources:
- CNBC, “Trump Media alerts Nasdaq to potential market manipulation from ‘naked’ short selling of DJT stock,” April 19, 2024.
- POLITICO, “Trump Media calls on GOP lawmakers for help in Wall Street fight,” April 24, 2024.
- Forbes, “CEO Devin Nunes Made $47 Million While Truth Social Parent Company Reported $401 Million In Losses In 2024,” February 24, 2025.
- CNBC, “Citadel Securities blasts Trump Media CEO Devin Nunes over DJT short-selling letter,” April 19, 2024.
- ProPublica, “Trump Media Whistleblower Blasts Company for Outsourcing Jobs Abroad as Betrayal of ‘America First’,” October 19, 2024.
- The Hill, “Truth Social owner asks Congress to investigate ‘potential manipulation’ of share price,” April 24, 2024.
- AGORACOM Small-cap Investor Relations Blog, “Terry Lynch Lays The Groundwork For Billion Dollar Class Action To Stop Naked Short Selling In Canada,” March 28, 2024.
- Insidexploration, “Investors Embrace Save Canadian Mining Led by Terry Lynch and Eric Sprott,” April 2, 2024.
- X post by GORACOM May 14, 2025.
- NAAG, “Center for Ethics and Public Integrity Newsletter: December 2022,” December 15, 2022.