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Monday, November 25, 2024

Trump’s $300 Million SPAC Deal May Have Skirted Securities Laws

BusinessTrump’s $300 Million SPAC Deal May Have Skirted Securities Laws
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Mr. Trump initially expected to announce his new social media company in August, according to a person briefed on the timing. But the plans were delayed after Mr. Trump’s son, Donald Trump Jr., voiced reservations about the Digital World deal, according to people familiar with the negotiations.

On Aug. 3, Mr. Orlando wrote to the S.E.C. asking for clearance to accelerate Digital World’s I.P.O. for that month, only to withdraw the request two days later. When the SPAC eventually went public on Sept. 8, raising $293 million, Digital World said it had still not identified a merger target.

Less than three weeks later, on Sept. 27, Mr. Orlando went to Mar-a-Lago, Mr. Trump’s private club in Florida, to sign a “letter of intent” — an initial formal step toward a merger of Digital World and Trump Media, according to a person with knowledge of the event. For a new SPAC, it was an extraordinarily swift turnaround; most SPACs take at least a year to find and merge with a target.

On Oct. 20, Mr. Orlando returned to Mar-a-Lago, where he and Mr. Trump signed the final paperwork under chandeliers in a cavernous golden ballroom, according to an attendee. Donald Trump Jr. and the former “Apprentice” contestants, Mr. Moss and Mr. Litinsky, were among those in attendance.

After the deal was announced last week, Digital World’s shares rocketed higher. This week, they plummeted. At least two of the anchor investors, D.E. Shaw and Saba Capital, sold much of their stock after the Trump deal came to light. Another prominent investor, Iceberg Research, announced that it was betting against the stock.

Even so, Digital World’s shares remain about seven times higher than before the Trump deal. On paper, at least, the company is worth more than $2 billion.

On Tuesday, as he was boarding a plane, Mr. Orlando wouldn’t say much about how the deal came together. “It’s been wild,” he said.

Kenneth P. Vogel, Michael Schwirtz and Shane Goldmacher contributed reporting. Susan C. Beachy contributed research.

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