Of Course Trump’s SPAC Deal May Have Broken Securities Laws

When Donald Trump announced last month that he was launching a new social network to compete with Twitter and other platforms on which he is no longer welcome, the venture appeared reminiscent of previous Trump undertakings in that it was completely cringeworthy and totally embarrassing. (Among other things, an unreleased version of the site had been vandalized by a picture of a defecating pig.) Another similarity? That the whole thing was a classic Trump maneuver, thanks to the fact that it was formed through a merger of a company set up by the former president, the Trump Media & Technology Group, and a special purpose acquisition company called Digital World Acquisition Corp. While SPACs are perfectly legal, the structure of the deal meant that TRUTH Social could be a miserable failure—nay, it could not even launch—and Trump could still make hundreds of millions of dollars. And now, in the least surprising news of the last century, we’ve learned that the deal may have violated securities laws.

Per The New York Times:

Just days after Donald J. Trump left the White House, two former contestants on his reality show, The Apprentice, approached him with a pitch. Wes Moss and Andy Litinsky wanted to create a conservative media giant. Mr. Trump was taken with the idea. But he had to figure out how to pay for it…. To get his deal done, Mr. Trump ventured into an unregulated and sometimes shadowy corner of Wall Street, working with an unlikely cast of characters: the former Apprentice contestants, a small Chinese investment firm and a little-known Miami banker named Patrick Orlando.

Mr. Orlando had been discussing a deal with Mr. Trump since at least March, according to people familiar with the talks and a confidential investor presentation reviewed by The New York Times. That was well before his SPAC, Digital World Acquisition, made its debut on the Nasdaq stock exchange last month. In doing so, Mr. Orlando’s SPAC may have skirted securities laws and stock exchange rules, lawyers said.

SPACs sell their shares to investors through an initial public offering and then find a private company with which to merge. Because SPACs are empty vessels, stock exchanges allow them to list their shares without disclosing much financial information. But that creates opportunities for SPACs to serve as backdoor vehicles for companies to go public without receiving the kind of investor scrutiny they would in a traditional listing. To prevent that, SPACs aren’t supposed to have a merger planned at the time of their IPO. Lawyers and industry officials said that talks between Mr. Orlando and Mr. Trump or their associates consequently could draw scrutiny from the Securities and Exchange Commission.

Another issue is that Digital World’s securities filings repeatedly stated that the company and its executives had not engaged in any “substantive discussions, directly or indirectly,” with a target company—even though Mr. Orlando had been in discussions with Mr. Trump. Given the politically fraught nature of a deal with Mr. Trump, securities lawyers said that Digital World’s lack of disclosure about those conversations could be considered an omission of “material information.”

“Financial markets are premised on trust,” Mike Stegemoller, a finance professor at Baylor University who studies SPACs, told the Times. “If these disclosures are not true, no one wants to participate in markets that aren’t fair.”

Lawyers for Trump Media & Technology Group didn’t respond to the Times’ requests for comment. A spokesperson for Trump referred questions to the company, whose representatives, including Moss and Litinsky, did not return requests for comment.

Trump, of course, has a long history of being a deeply shady businessman whose years of cons may soon be catching up to him. According to a 2018 Pulitzer Prize–winning investigation from The New York Times, the Queens-born real estate developer “participated in dubious tax schemes during the 1990s, including instances of outright fraud.” In 2016, he paid a whopping $25 million to settle lawsuits brought against Trump University, a gigantic sum for someone who maintained the whole enterprise was legit. In 2019, he paid $2 million for scamming charities through his Trump Foundation, which was shut down for a “pattern of illegality.” And, of course, his company, the Trump Organization, was charged with a cornucopia of crimes in July, including conspiracy, and multiple counts of tax fraud and falsifying records, for which it has, naturally, pleaded not guilty. So yeah, the idea that Trump would engage in behavior that wasn’t entirely on the up and up is…completely in keeping with what we know about the guy!

Joe Manchin should just become a Republican already, part 838,572,417

The senator from West Virginia, supposedly a Democrat, has once again refused to just get on board with Joe Biden’s Build Back Better bill, the most recent iteration of which was specifically pared down and neutered to win his vote. Per The New York Times:

Manchin…all but dashed hopes for quick votes this week on President Biden’s domestic agenda, saying on Monday that he would not endorse a $1.85 trillion social policy and climate package without ample time to consider its economic and fiscal ramifications. During an appearance at the Capitol, Mr. Manchin, a crucial Democratic swing vote, condemned liberals in the House who have refused to vote for a separate $1 trillion bipartisan infrastructure plan without a final deal on the domestic policy plan, saying their tactics would not pressure him into swallowing his grave reservations about the safety net measure.

The social safety net measures would improve the lives of millions of Americans, but according to Manchin, only the yacht-owning class should have such luxuries as affordable childcare and hearing covered by Medicare.

His comments poured cold water on plans by House Democratic leaders to quickly complete talks on the safety net bill and bring both measures to a vote this week, leaving the fate of Mr. Biden’s top two priorities up in the air again. They also undercut the president’s assertion that an outline of the social policy and climate plan that he presented last week had the backing of all 50 Democratic and independent senators.

“While I have worked hard to find a path to compromise, it is obvious compromise is not good enough for some in Congress,” Mr. Manchin said, reading from prepared remarks. “It’s all or nothing, and their position doesn’t seem to change unless we agree to everything. Enough is enough.”

In a statement, White House press secretary Jen Psaki said that the legislation currently being negotiated in the House had met the demands laid out by Manchin to address inflation, create jobs, and be fiscally responsible. “The plan the House is finalizing meets those tests: It is fully paid for, will reduce the deficit and brings down costs for health care, child care, elder care and housing,” she said, adding, charitably “as a result, we remain confident that the plan will gain Senator Manchin’s support.”

The Supreme Court seems poised to throw Texas abortion providers a bone

While it seems like there’ll be enough votes to allow a lawsuit against SB8, which bars abortions at six weeks, reproductive rights advocates shouldn’t get too excited just yet. Per The Washington Post:

A majority of Supreme Court justices Monday seemed willing to allow a challenge by abortion providers to a unique Texas law that bans most abortions after six weeks and allows enforcement by private citizens. The court’s three liberal justices have already said that the law is unconstitutional and that it should be halted until federal courts can look at it more closely. The court in a 5-to-4 vote turned that option down before the law went into effect Sept. 1. But at Monday’s three-hour hearing, Justices Brett M. Kavanaugh and Amy Coney Barrett—part of that five-justice majority—repeatedly countered Texas’s arguments and seemed more swayed by challengers’ arguments that the law improperly blocked the judicial review necessary when constitutional rights are at stake.

“There’s a loophole that’s been exploited here, or used here,” Kavanaugh said to Texas Solicitor General Judd E. Stone II, and suggested it might be better to close it rather than allow Texas to use it. Barrett seemed concerned that the Texas law was written to avoid effective judicial review of the law in either federal or state courts. The justices are considering two cases, one brought by abortion providers and the other by the Biden administration. In their questioning, the justices seemed more interested in deciding the challenge brought by the clinics, rather than confronting the issues raised by the United States suing Texas.

Obviously, it would be a positive outcome if SCOTUS decided abortion providers can challenge the loathsome and barbaric SB8. But as legal experts have noted, the real case when it comes to abortion rights is the Mississippi one being argued before the court in December. As attorney and The Nation justice correspondent Elie Mystal wrote on Monday: “All that said *ALL OF THIS* was really for show because the real threat to abortion is in next month’s case, Dobbs v Jackson Women’s Health. Which is the Mississippi abortion ban. That’s where SCOTUS always intended to strike down Roe.”

Surprise: Trump is blathering on about fictional election fraud again

This time, the baseless claims, which is all the GOP has anymore, are focused on Virginia:

Elsewhere!

How Trump’s 187 minutes of inaction led to Jan. 6 bloodshed (The Washington Post)

Democrats scramble to get a drug-price compromise but wait on Sinema (The Washington Post)

Millions of Kids’ COVID Vaccines Shipped Ahead of CDC Clearance (Bloomberg)

Facebook whistleblower Haugen says Zuckerberg should step down as CEO (CNBC)

Elon Musk Is Now Three Times Richer Than Warren Buffett (Bloomberg)

NYC puts 9,000 workers on unpaid leave as vaccine mandate kicks in (Politico)

Zillow Is Selling 7,000 Homes After Flipping Halt (Bloomberg)

Prince Charles, once dismissed as a plant-talking oddball, takes his environmental bona fides to COP26 (The Washington Post)

California family’s fake fire Halloween display prompts 911 calls (TSG)

“I eat raw liver, testicles, and bone marrow and it’s transformed my life” (NYP)

— Mike Pence Is Already Cashing In on His Potential 2024 Run
— Katie Porter and Her Whiteboard Are Just Getting Started
— Trump’s New Social Media Company Is His Biggest Scam Yet
— Former Bush Guy Matthew Dowd Is Trying to Turn Texas Blue
— Joe Manchin Is About to Make Life Worse for His Own Constituents
— David Zaslav Is Angling to Become America’s King of Content
— Colin Powell’s Death Has Officially Been Hijacked by Anti-vaxxers
— Rigged State Governments Are Steadily Undermining Democracy
— From the Archive: Rupert Murdoch’s Tumultuous Third Marriage
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