Trump's Deal May Have Skirted Securities Laws

[applegrove]

Trump’s Deal May Have Skirted Securities Laws

October 30, 2021 at 3:47 pm EDT By Taegan Goddard 21 Comments

https://politicalwire.com/2021/10/30/trumps-deal-may-have-skirted-securities-laws/

"SNIP....

Donald Trump’s new social media company might be running afoul of securities laws, the New York Times reports.

.....SNIP"

[maxrandb]

1. "May Have"?????

Saying Donnie Shit for Brains "may have" broken the law, is like saying Jeffrey Dame was a decent neighbor because he only ate out of towners.

[elleng]

2. No sh*t, sherlock.

[Takket]

3. i'm sure the SEC will come down on him like a ton of bricks

[ZonkerHarris]

4. any part of the story anyone can share from behind the paywall?

[Nevilledog]

6. New York Times article without paywall

https://archive.ph/GBVxc

[LetMyPeopleVote]

10. Thank you

There will be litigation https://archive.ph/GBVxc
The SPAC was downsized from $350 million to $293 million and there were discussions between TFG and the promoter of the SPAC during the IPO period

Soon after Mr. Juhan mentioned Trump Media’s agreement with a SPAC, Digital World said that it hoped to raise nearly $350 million from investors. In August, the SPAC disclosed that it had lined up 11 prominent hedge funds and other big investment firms like D.E. Shaw, JPMorgan Chase’s Highbridge Capital and Saba Capital to serve as “anchor,” or main, investors in the initial offering.

“We have not selected any specific business combination target and we have not, nor has anyone on our behalf, initiated any substantive discussions, directly or indirectly, with any business combination target,” Digital World said in prospectuses filed with the S.E.C. in May, July, August and September. Digital World said it would probably focus on companies in the technology or financial services fields.
Securities lawyers said that any conversations between Mr. Orlando’s and Mr. Trump’s teams anytime before the I.P.O. in September might constitute an indirect discussion of a potential deal and so would have needed to be disclosed.

“The prospectus broadly denies that any talks have taken place,” said Usha Rodrigues, a professor at the University of Georgia Law School and one of the leading academic experts on SPACs. “If they were in fact engaged in discussions at the time of the prospectus, that raises questions regarding a potential securities violation.”....

The S.E.C. has begun paying closer attention to the timing of deal negotiations, and so have investors in SPACs.
This summer, investors filed a lawsuit in federal court against a SPAC and the company it acquired. The plaintiffs argued that it was “substantially likely that the transaction was prearranged or at least preconceived,” given how swiftly the SPAC, Netfin Acquisition, had entered into exclusive talks with the target company, Triterras Fintech. They also pointed to the longstanding relationship between executives at the two companies. The suit is pending.

[WarGamer]

11. the SEC has been historically weak...

A slap on the back of the hand, at worst...

[ZonkerHarris]

14. Thank you!

[walkingman]

5. The dude will never be held accountable for anything - that is reality.

[Baked Potato]

7. All I can say is that's a lot of money for Dump to tap. Nt

[LetMyPeopleVote]

8. This deal stinks and I am interested to see if the merger is adopted

Link to tweet

[WarGamer]

12. The merger will be completed... you never responded re: the gentlemens bet, LMPV

[LetMyPeopleVote]

13. I stopped reading your posts when none of your sources backed up your claims

What is the terms of the bet?

Did you read the NYT article posted above?

There will be litigation on a host of issues:
1. The false statements in the initial prospectus
2 The lack of assets or income for the TFG entity. This entity is supposed to have a value of $800 million with no assets or operations
3, This site was hacked early on.
4. The intellectual property clams will be fun to watch. This software is copied from Mastadon and may never survive until 2022

This summary on TFG's software amuses me
https://www.thedailybeast.com/why-maga-social-media-is-a-hackers-wet-dream?ref=scroll

TruthSocial’s terms of service agreement shows few indications of forethought about how the company will handle these kinds of thorny issues. The platform’s agreement is mostly copied from widely used language found in the terms of service sections of hundreds of smaller websites like PatriotCoolers.com, who face a different threat environment than a social media app run by a controversial former president.

“It does not sound like [TruthSocial has] a compliance team, it does not sound like there are lawyers on staff, or anybody even doing the basic due diligence in the same way it doesn’t sound like they have anybody doing the most basic security engineering,” Galerpin said, adding that its source code appears to have been taken directly from Mastodon, an open source social media network, but without jumping through all the appropriate hoops.

Mastodon put the pedal to the medal and sent a letter to Truth Social’s legal team last week in an attempt to get them to fess up to their slip-up.

For now, for the newest social media venture in MAGA-land, Truth Social, the future does not look bright, Galperin said.

”I imagine a series of embarrassing security and policy failures followed by a very boring fizzle. I don’t imagine any of these sites are going to replace any of the tech giants anytime soon.”

There is a lack of a PIPE and the normal redemptions will kill the viability of this deal

Link to tweet

I hope that you made money on the MAGA idiots and that you are out of this piece of crap stock

[WarGamer]

15. Oh yeah, I'm well out of DWAC. I jumped into the middle TSLA though...

Rode a few 1000c from 960 up to 1080 on Friday... made my weekend!

I'm very cynical of the Stock Market. I play it to make money. I think the system is cooked. The key is to play the market like the people who "cook it". Once you do that... follow around the sharks and you'll get the crumbs.

But about DWAC, it's still 60$+ a share, up 500% from the merger announcement. The merger WILL complete.

I see bad SPAC's all the time. I've lost money on them. There are enough people banking on Trump's ability to transfer 73 million votes and 100m+ social media followers to a new platform.

Re: the hacking and the IP theft. We have no idea what the platform will be. If I had to make a guess, I'd say the Mastodon based platform was just a mock-up to be able to show investors. I highly doubt the final platform will be open source.

IMHO, this is out of Trump's control.

He knows NOTHING about any of this. The SPAC runner has completed several successful mergers. I expect TMTG to poach some Silicon Valley talent, possibly bring Peter Thiel on the board to get Silicon Valley cred. With the multi-billion dollar valuation, they can build something big.

Don't get me wrong, I'm not criticizing you personally... we just disagree whether the merger will execute. I think it's a sure thing and you think the SEC or some litigation will stop it.

Have a good night!

[LetMyPeopleVote]

16. I have helped out on some securities cases and know a good number of plaintiff firms

I have a feeling that there will be some litigation pending before this merger is closed

A couple major investors are already bailing and there is no PIPE in place to protect against excessive redemptions.

One major investor has bailed on this stunt https://www.nytimes.com/2021/10/22/business/dealbook/boaz-weinstein-trump-spac.html

News that Donald Trump was bankrolling a new media venture through a SPAC deal sent shares in the blank-check fund soaring some 350 percent. Much of that probably came from individual fans of the former president plowing into the vehicle, Digital World Acquisition. But at least one of the SPAC’s backers, a major hedge fund, pulled out over the Trump connection, and the question now is whether others will follow suit — or chase potential profit.

The hedge fund mogul Boaz Weinstein wanted out once news of the Trump deal emerged. He placed a sell order on all of the unrestricted shares in Digital World that his firm, Saba Capital, owned yesterday morning, though Saba still owns some restricted stock that it can’t sell for six months.

Saba sold its holdings in the first hours of trading, making a small profit — but before Digital World’s shares shot up, missing out on a huge gain. Weinstein said in a statement: “I knew that for Saba the right thing was to sell our entire stake of unrestricted shares, which we have now done.Many investors are grappling with hard questions about how to incorporate their values into their work. For us, this was not a close call.”

[BootinUp]

9. I really thought this was all

On the up and up.

[leftyladyfrommo]

17. The only lawyers that take his cases are so bad they

Wouldn't know security laws even exist.