“The fact that the DOJ is looking at it is going to give the SEC more pause about allowing this deal to go forward,” says Robert Jackson, a former SEC commissioner who is now a professor at New York University School of Law.Įven before the latest news, there was skepticism about the fate of the Trump SPAC. The combined weight of these probes makes it unlikely that Trump Media will ever get its public listing - and the cash that would go along with it. And there’s even a third investigation - by the Financial Industry Regulatory Authority - that is related to trading activity ahead of the merger announcement.

This DOJ investigation comes on the heels of a similar one by the SEC, which is looking to see if the SPAC broke securities laws by agreeing to the deal with Trump’s company ahead of its IPO without telling prospective investors. But Trump’s SPAC effort has an even bigger problem: In June, Digital World Acquisition Company, the publicly traded shell company that agreed to buy Trump Media, disclosed that both companies and their executives had received subpoenas from a federal grand jury in the Southern District of New York. Like meme stocks and crypto, SPACs were a phenomenon of the bull market that has largely fizzled, leaving many aggrieved investors deep in the red. That could mean the end of Truth Social, a segment of Trump Media that would be financed by the SPAC’s proceeds. The appeal for the private company is that the regulatory hurdles and the financial scrutiny tend to be lower than going public in the traditional way.īut it is looking less likely that Trump’s company will get the deal done. The merger of the two (the private company seeking to go public and the already-public shell company promising investors an auspicious marriage) amounts to a sort of legal backdoor route to an IPO. Trump Media has been beset by controversy, executive departures, and technical difficulties ever since its existence was unveiled last October, when it sought to cash in on a financial craze with a plan to raise something like $1 billion by merging with a publicly traded blank-check company known as a SPAC, or a special-purpose acquisition company. While retail investors are still buying, smart-money institutional investors are betting the shares will go down, as the company’s prospects seem to worsen by the week under a steady stream of negative news. (Musk has said he plans to let Trump return to Twitter if he takes ownership, which could make Truth Social all but irrelevant.)īut these are slim reeds on which to build a case for the success of Trump’s latest business venture, Trump Media & Technology Group.

(For what it’s worth, that doesn’t seem like a good bet - the DOJ and SEC investigations of a SPAC are entirely different sorts of legal processes.) Another reason for retail investors’ continued irrational exuberance about the Trump SPAC is that it could benefit if Elon Musk is successful in his effort to get out of purchasing Twitter - leaving Trump’s Truth Social as the likely social-media hub of his 2024 campaign. Some of their optimism may lie in the perception that all of Trump’s legal woes are illusory and that he will shake them off as easily as he did his unprecedented two impeachments and, to date, the various threats of prosecution that have hung over him and his real-estate company. By comparison, the S&P 500 rose only 9 percent in its July rally.Ĭould the Trump true believers who are still buying and holding the stock - 94 percent of its investors are individuals, not institutions - be falling for another Trump grift? Over the past month, the stock price of the company that hopes to merge with Donald Trump’s new media outfit has surged by almost 25 percent, a move that seems counterintuitive given that the proposed deal is under investigation by both the Department of Justice and the Securities and Exchange Commission. Photo-Illustration: Intelligencer Photo: Mandel Ngan/AFP via Getty Images

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