A variety of Trump watchers have tracked Donald Trump’s business failures, lawsuits and assorted controversies. Now, Trump's social media venture has released a rap sheet cataloguing the many stains on his long business career.
This remarkable disclosure occurs on page 107 of the registration statement Digital World Acquisition Corp. (DWAC) filed with the Securities and Exchange Commission on May 16, providing key details of its planned merger with Trump’s new company, Trump Media & Technology Group. DWAC is a so-called blank check company set up last year that in October announced a deal to merge with Trump’s company, including the Truth Social messaging app. DWAC’s shares soared from $10 to $94 on the news. The shares now trade around $45.
The registration statement provides details relevant to shareholders, including risks they might want to know about. That’s where the fun begins. Many of the risks posted in 66 pages of disclosures are boilerplate startup concerns, such as tough competition or possible financing difficulty. Then comes a section you won’t see in any other business filing: “Risks Related to our Chairman President Donald J. Trump.”
This section includes five basic parts: A list of lawsuits Trump is involved in; a fraud charge the government levied against a Trump company 23 years ago; a list of Trump companies that have filed for bankruptcy; another set of Trump ventures that failed without declaring bankruptcy; and the rules governing Trump’s role in the company. Most of the information isn’t new, but this tidy compilation amounts to overt acknowledgement that Trump isn’t the business genius he makes himself out to be.
This does not even claim to be 'an exhaustive list'
The first part advises shareholders that “President Trump is involved in numerous lawsuits and other matters that could damage his reputation, cause him to be distracted from the business or force him to resign.” The filing notes the ongoing Congressional inquiry into the 2021 riots at the Capitol, several lawsuits related to Trump’s bogus claims of election fraud, the Georgia probe that could charge Trump himself with election fraud, the New York state attorney general’s civil inquiry into possible tax evasion and the defamation suit filed by E. Jean Carroll, an author who accused Trump of raping her.
“The foregoing does not purport to be an exhaustive list,” the filing states. Then it helpfully references a 2016 USA Today story that tallied more than 3,500 lawsuits relating to Trump during his career.
The second part revisits a report Trump Hotels & Casinos Resorts put out in 1999 with inflated earnings. The SEC took note and ordered the company to change its reporting procedures.
“The earnings release was materially misleading,” the DWAC statement says.
The third part lists the Trump companies that have gone bankrupt. Trump claims there have only been four bankruptcies, because of the way three of the bankruptcies were grouped. But six entities went bankrupt, and the DWAC statement lists six.
“There can be no assurances that TMTG will not also become bankrupt,” it warns.
The fourth part lists other Trump ventures that failed without declaring bankruptcy, including Trump Shuttle, Trump University, Trump Vodka, GoTrump.com and Trump Steaks.
“While all these businesses were in different industries than TMTG, there can be no guarantee that TMTG’s performance will exceed the performance of these entities,” the statement says.
The fifth part provides details of Trump’s personal role in the Trump Media & Technology Group, including Truth Social. There’s this tidbit: Trump is “generally obligated” to publish any social-media post on Truth Social first, and wait six hours before posting the same thing anywhere else. Trump has said he wouldn’t rejoin Twitter (TWTR), which banned him after the 2021 Capitol riots, even if it rescinded the ban. Now we can see he’d be constrained in posting on Twitter, anyway. There’s one loophole: Trump can post on any social media outlet if it’s “related to political messaging, political fundraising or get-out-the-vote efforts.”
The risk disclosures wrap us by declaring, “TMTG expressly acknowledges the controversial nature of being associated with President Trump and the possibility of any associated controversies affecting TMTG adversely.” But everybody knew that.
Analysts such as Bloomberg’s Matt Levine have lampooned the company for shabby financial analysis, but the stock rose about 9% on the day DWAC filed its statement with the SEC. That could reflect optimism that the merger seems to be on track, and it also reflects Tesla CEO Elon Musk’s on-and-off efforts to buy Twitter, which would be Truth Social’s top competitor. Musk has said he’d let Trump back on Twitter, but if Musk doesn’t buy the company, Trump wouldn’t have that option. That, in turn, could make Truth Social more prominent.
DWAC investors seem completely unfazed by Trump’s troubled history. When you ride with Trump, you expect some swerving. At least you’ve been reminded to buckle up.