• by Steven Rosenbaum , Featured Contributor, March 25, 2024

The story of how Truth Social has arrived at a moment to become a public company seemingly overnight is a complicated financial journey -- but one worth unpacking.

The public company that is merging with Truth Social was formed in 2019 in shell company known as a SPAC, a Special Purpose Acquisition Corp. You can read the SEC filings here. There are 283 pages of filings; see if you can find a clearer story than that one I’m going to try and sort out.

But the core question is this. Since a SPAC can’t be formed or offered with a target acquisition in mind, and since Truth Social wasn’t created by Trump Media & Technology Group (TMTG), until October 2021 -- what was DWAC formed to do, and by whom?

Patrick Orlando, CEO of DWAC, had been telling investors privately for months that he’d been talking with Trump about a deal -- a violation of federal securities law.

The Washington Post, trying to untangle the complicated financial wrangle, writes “In June 2021, the court filings say, Orlando went to meet prospective investors at the Miami-area offices of Rocket One, led by Gerald Shvartsman.” A 2022 Financial Times report said, “Shvartsman, his brother Gerald, and Bruce Garelick, the investment chief of Shvartsman’s private-equity firm Rocket One Capital, have been charged with conspiracy and securities fraud in the case.”

Today, Trump's Truth Social is losing money and has virtually no ad sales. Yet it could trade at a $5 billion value on the public markets.  The current CEO of Trump Media is Devin Nunes, who served in U.S. House of Representatives for  19 years and has no previous experience in media.

Seventeen hours ago, Donald Trump owned nearly 80 million 'DJT' shares After the merger Trump is expected to own 69.4% of the combined company, and the stock ticker will be "DJT,"  his initials.

So who are the largest owners of DWAC? Well, number one on the list, according to the SEC is Susquehanna International Group, LLP, whose owner is Jeff Yass, an options trader who according to Forbes is worth over $27 billion. Yass is rumored to be the Major TikTok investor who singlehandedly convinced Trump to back off banning the Chinese-owned video app. 

Other top institutional shareholders of DWAC are Atika Capital Management, LLC, ATW Spac Management LLC, Sapient Capital LLC, Buckingham Strategic Wealth, LLC, LPL Financial LLC, Chickasaw Capital Management, LLC, Commonwealth Equity Services, LLC, Lincoln Capital Corp, Group One Trading, L.P.

Quotes from a report in Politico: “It’s simply trading on Trump’s name,” said SPAC Insider founder Kristi Marvin. “People aren’t buying this because they like the fundamentals — they’re buying this because they like Trump.”

Donald Trump's history of bankruptcies and ongoing legal cases and the implications of his involvement with a publicly traded company like DWAC adds layers of complexity to assessing potential risks. Donald Trump and his businesses have been involved in over 4,000 legal cases in U.S. federal and state courts from the 1970s until he was elected president in 2016. This includes a wide range of disputes, from real estate lawsuits to personal defamation suits and over 100 business tax disputes.

Since leaving office, Trump has continued to face multiple legal challenges, including criminal indictments and civil lawsuits. According to the Institute for Policy Integrity, the Trump administration lost nearly 93% of its court cases related to agency actions, which is a historically low win rate compared to most administrations that have around a 70% win rate.