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Did Trump's Truth Social Network Skirt US Securities Law? (nytimes.com) 158

Posted by EditorDavid from the SPAC-man dept.
To fund the Truth social network, former U.S. president Trump merged it with a special purpose acquisition company (or "SPAC"), reports the New York Times. "The result is that Mr. Trump — largely shut out of the mainstream financial industry because of his history of bankruptcies and loan defaults — secured nearly $300 million in funding for his new business."

But there may be a hitch: 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 aren't supposed to have a merger planned at the time of their I.P.O. 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."
The Times adds that Trump had previously even discussed merging Trump Media with a smaller SPAC created with help from the same Shanghai-based investment bank — which "specialized in helping Chinese companies list on U.S. stock exchanges."
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Did Trump's Truth Social Network Skirt US Securities Law? More

Did Trump's Truth Social Network Skirt US Securities Law?

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  • Why anyone loans this man money is a mystery (Score:4, Insightful)

    by aerogems ( 339274 ) on Saturday October 30, 2021 @05:52PM (#61943177)

    How desperate do you have to be, as a banker, to want to loan money to some guy who has a reputation for bankruptcies, defaulting on loans, and then suing his creditors? Never mind that, just from what little we know about his finances, he's up to his giant bald spot in debt. All he has going for him is a flock of idiots who don't seem to mind being fleeced time and time again, but the American public is fickle and sooner or later they'll grow tired of Trump and move on to someone else. Then what happens? It also probably wouldn't take much arm twisting from the current administration of the Chinese government to get them to pressure the Chinese backers to pull out of the deal. Even if Trump manages to win in 2024, all the Chinese government needs to do is wait him out for four years, unless the next time around he actually succeeds in a coup of the government.

    • Re:Why anyone loans this man money is a mystery (Score:5, Interesting)

      by fermion ( 181285 ) on Saturday October 30, 2021 @06:42PM (#61943299) Homepage Journal
      This is what I tell people. Banks have to loan money. They are good at calculating risk so tend to make money. But to make money they have to convince the economic naive that bankruptcy and default is a moral failure. You are charged 10 or 15% or 20% over prime on your credit because you are taking an unsecured loan, and when you donâ(TM)t pay it the creditors cry that you are a moral,failure. But the economic elite know this is just a game to steal from the middle class. There are no real long term effects. You can still get a credit car, still buy a home or car. And like Trump you can make a fortune in the process

      • I get that interest rates on credit cards can be outrageous. And there should definitely be more regulation in that regard. But how do you figure that borrowing money... or anything, really... and not giving it back is "a game to steal from the middle class?" To my mind, "borrowing" something and not giving it back is theft on the part of the "borrower", not the lender.

        Yeah... shit happens. And there should be a safety net to catch good, honest people; and give them a hand so they don't hit rock bottom.

        • Re: (Score:2)

          by Sique ( 173459 )
          The middle class is the part of the population that is most easily taxed to bail out all the risk takers and entrepreneurial active and investors and whatever. Who do you think gets stuck with his bill if a Trump development defaults? It's the small construction company subcontracted for the work, which has to default too, and whose employees are laid off because of bankruptcy.

        • Re: (Score:2)

          by fermion ( 181285 )
          It is up to the banks to decide the level of risk and the interest knowing there is a chance they will not be repaid. In this context, interest rates are not necessarily outrageous. Most do not understand the risk, which is why we have regulation. To protect them. But we still have religion, which builds these moral ideas that money is god. Back in the industrial revolution in the US the evangelical revivals were popular with business owners as they instilled a sense of inferiority in the middle class. You

      • Re: (Score:3)

        by dfghjk ( 711126 )

        Borrowing money without the intention to pay it back IS a moral failure, it is not merely described as such by banks. These "economic elites" you speak of are immoral people, not merely people playing "a game". And yes, there are "real long term effects", just not by your measure (because you are a moral failure for not understanding what you speak of).

        If everyone participated in the system as you describe, there would be no system. It only exists because most people understand the difference between rig

        • Nobody said anything about borrowing without intent to repay which can constitute fraud. People borrow with intent to repay. But if things go terribly awry, they have the right to bankruptcy proceedings. That right is often not executed when it should be because people misunderstand that it's something they paid for and that filing for bankruptcy is not morally equivalent to stealing.

    • "How desperate do you have to be, as a banker, to want to loan money..."

      Not desperate at all. Think of it as "a legal bribe". A way to get Trump to tell people, "Hey, this guy gives me money so he'll give you money as well."

      What the actual interest or "favors" wanted in return is anyone's guess.

    • How desperate do you have to be, as a banker, to want to loan money to some guy who has a reputation for bankruptcies, defaulting on loans, and then suing his creditors? Never mind that, just from what little we know about his finances, he's up to his giant bald spot in debt.

      It depends on the terms of the loan. If they offered the terms I suspect they did then they will have done everything to mitigate the risk that DJT represents. And on top of that get interest that nobody who is not desperate is willing to pay.

      In spite of everything DJT still has massive assets left. If he liquidated everything and paid off all debt he would still have 0.5B to 1.0B of "liquid" and that can be quite appealing to a bank that has excessive capital on the books and wants to charge stupendo

    • I keep getting the feeling Trump and cryptocurrency would be a perfect fit. If anyone could bring Bitcoin down, he'd be the one.

    • it was a bunch of old money idiots who didn't know better. After that it wasn't loans, it was the Russians laundering money through him. The media didn't cover it much in 2016 because a) they wanted a horse race and Trump was great for ratings and b) nobody thought he could win because hey, first women president (turns out Americans don't really care).

      Ironically the only reason Trump wasn't thrown into the poor house in the early 2000s is that those old money idiots let him keep some cash in the hopes t
  • So right now I think it's still too early to discuss anything because the site is not even online yet. I'm eager to see how this will erupt in fierceful arguments everywhere on the internet... Some will call it shit and others will call it greatness. It's gonna be clearly easy to distinguish folks from both sides of the arguments.. and what I'm eager to see is how people reveal themselves during those arguments.

    • Re:It seems to be planned for go-live soon (Score:5, Insightful)

      by gtall ( 79522 ) on Saturday October 30, 2021 @06:15PM (#61943229)

      Doubt it, it will most likely be dud. Right wingnuts talking to each other will bore themselves to tears because there won't be any "libs" to own. Teenagers will have field day spamming the site. Remember the first rule of the former alleged president: he destroys everything he touches.

      He'll fleece his "backers". They'll lose their "investments". Then he'll sue them for causing him to "lose" money, they sue him back for breach of contracts. He'll go shoot his mouth off about how it was all a big conspiracy to harm him. It will end like all his business efforts in a haze of lawsuits and loud noises.

      • For entertainment value, hackers will probably divulge identities and content of all the users soon after launch which will generate rounds of conspiracy laden tirades about which liberal groups did it.

    • It's purpose is independent of the discussion about it's credibility. It is part of the same psychological warfare that Trump's thousands of lies were designed to win. To destroy people's understanding of what facts are and the civil structures of knowledge and authority and replace them with the cult of an authoritarian dictator. Humans are susceptible to superstition and fear, the Republicans have replaced policies with superstition and fear because even they know their policies are no longer credible to voters. The narrative of politics is now about which team you support and how much you hate and fear the other team. Some traditional warfare is still being engaged in such as McConnell's blocking of any legislation that might help the population, the successful attempt to discredit modern medicine and extend the Covid epidemic, Manchin and Sinema's likely bribed positions that have gutted the infrastructure bill. The main attack though is to create as much fear and hatred as possible through unsubstantiated lies about the current government. Trump Social is just another minor outlet for this propaganda war.

      • Re: (Score:2)

        by GlennC ( 96879 )

        If I had mod points, I would mod this to the stratosphere.

      • So when this deal gets overturned and his social media company vanishes, all the blame will be on the evil government who won't let an honest small family business like Trump's get ahead. Then the protests start against the SEC and Wall Street, and he'll ask for donations and it'll all pile up again.

      • It is part of the same psychological warfare that Trump's thousands of lies were designed to win. To destroy people's understanding of what facts are and the civil structures of knowledge and authority and replace them with the cult of an authoritarian dictator.

        This only works because the people who, for whatever their reasons, want those lies to be true and want to be a part of that "truth".

    • Re: (Score:3, Funny)

      by sjames ( 1099 )

      Well, so far it's been called out for violating the GPL, someone managed to sign themselves up as Donald Trump, and the entity that's raising the funding faces credible accusations of fraud. All before Trump could pull the first post from his ass.

      What are they going to call posts on that site anyway, "fart", "squeaker", "bottom burp"?

      • What are they going to call posts on that site anyway, "fart", "squeaker", "bottom burp"?

        Actually, from a few articles I read, they plan on calling them "Truths" (or some derivative). Also, from Truth Social [wikipedia.org]:

        The company applied for trademarks on the name "Truth Social" and other terms including "truthing", "retruth", and "post a truth".

      • Re: (Score:2)

        by shanen ( 462549 )

        How about "brarts" from "brain farts"? Or maybe twist it against Asians as "blarts"?

    • I'll probably be camp 3. The ones that go "meh", roll their eyes and finally ignore it.

      It's one of those things where the discussion about it is more entertaining than the thing itself. Much like a lot of recent movies.

    • I think it will run into the same problem that every 'alternative' social media platform has. The problem that means Bitchute's front page for a non-logged-in browser currently carries a video titled "Ted Gunderson: FRANKLIN COVER-UP/FINDERS CULT ARE CIA/FBI/CPS INTERNATIONAL CHILD TRAFFICKING OPS"

      People want to use the major social networks, because that's where the action is - it's where you get views, and it's where your friends are. Most of the people who go to the smaller, alternative networks are doin

  • Thus does Trump serve his role (Score:5, Interesting)

    by davide marney ( 231845 ) on Saturday October 30, 2021 @05:59PM (#61943199) Journal

    Trump exists because he infects his opponents with a virus of fatal attraction. Like the tar-baby of Uncle Remus, the more they attack him, the more entangled they become. They think they're defeating him, but in reality he is wasting their time, energy, and money.

    Exhibit 1 is the Virginia election. McAuliffe's fatal attraction to Trump has turned a safe win into a nail-biter.

    • Exhibit 1 is the Virginia election. McAuliffe's fatal attraction to Trump has turned a safe win into a nail-biter.

      So you are saying the voters are picking authoritarian losers because they are tired of being told the other guy is an authoritarian loser?

      yup, the voters are stupid.

      • Actually, this is an excellent example of what I'm describing. You think that guilt by association works against Trump. But it manifestly doesn't; a whole lot of voters on the right have moved on past Trump, long ago.

        Result? You wind up calling the very people you need to convince to vote for your team "dumb". Which gives them all the reason they need to vote for the other guy.

        Step one here is literally to step back. Back off the TDS train, get onto the platform, and look around. People are looking for a di

        • Re: (Score:2)

          by dfghjk ( 711126 )

          None of this makes the slightest sense.

          "You think that guilt by association works against Trump."

          It does, but only on those who have a negative view of Trump.

          "But it manifestly doesn't; a whole lot of voters on the right have moved on past Trump, long ago."

          No it does, and few Trump voters have "moved on past Trump", much less long ago.

          "You wind up calling the very people you need to convince to vote for your team "dumb". Which gives them all the reason they need to vote for the other guy."

          This is a very con

          • The point is:

            1) Trump is in the past.
            2) People who cling to Trump are annoying.
            3) If an R-team candidate doesn't cling to Trump (like Youngkin) and the D-team candidate does (like McAuliffe), then it gives the R-team an advantage.

            That is the hypothesis, and Virginia is one piece of evidence in support of that hypothesis. Further elections may provide more evidence for or against.

        • Re: (Score:2)

          by Joviex ( 976416 )

          Result? You wind up calling the very people you need to convince to vote for your team "dumb". Which gives them all the reason they need to vote for the other guy.

          Step one here is literally to step back. Back off the TDS train, get onto the platform, and look around. People are looking for a different candidate.

          Yeah, again, failed logic.

          being 5 years old and sticking your fingers in your ears because you dislike chocolate icecream and want vanilla only hurts YOU in the future.

          So yes, they are the morons; and no I dont need some weird justification -- you obviously havent spent any time outside with actual people.

    • I do not understand why seasons Democratic candidates can't just ignore the guy. Stop stepping the bear trap, kids.

      • Because Trump still has the GOP in thrall.

        • Well, whose fault is this?

          The GOP has been schmoozing up the religious nutjobs for decades now, and finally, someone comes along that is exactly like their god: A narcissistic, self-absorbed, antisocial diva.

          Why is anyone surprised that they think they found their messiah?

          • Re: (Score:2)

            by dfghjk ( 711126 )

            Could not be more true. Religion, with its grotesque hypocrisy, is an overwhelming component of this. The remarkable contradictions between the supposed Christian views of the "religious right" and their chosen leader is actually expected, not confounding. After all, religion is about power in the first place. This is why the US was founded as a secular country and why the religious extremists continually argue to the contrary.

            There could be nothing more beneficial to our democracy that the complete rej

      • I do not understand why seasons Democratic candidates can't just ignore the guy. Stop stepping the bear trap, kids.

        Because voters aren't ignoring him either. If you ignore a propaganda war you may as well forfeit. Look at Brexit. The Remain side campaigned on "something will change and it will likely be worse than what we have". The Leave side campaigned on an endless string of the most hyperbolic lies and bullshit that didn't pass the slightest bit of muster, and with no counter to the propaganda there are people who voted for it now genuinely upset that they weren't told it would turn out this way.

        • Yes, a very good point. But the way forward is to present something better, not just "not Trump". And in fact, that's exactly what Brexit offered, which is why the Remain side lost.

          Positive always beats negative as a long-term strategy. Negative beats positive only in the short term.

          • Re: (Score:3)

            by dfghjk ( 711126 )

            " But the way forward is to present something better, not just "not Trump". "

            Bullshit. Trump doesn't "present something better" nor does his voter respond to such appeals. The way forward is an even more insistent "not Trump", not less. Trump's health could fail, he could be replaced by Elon Musk who is just as sociopathic but much smarter. The war is not over "better ideas", it is over corruption of power. Trumpism was defeated in 2020 by remarkably narrow margins and ONLY because of an amazingly stro

            • What the GP has right is that Trump offered a message of hope. It was bullshit but it was positive. It is easier to sell that than uncomfortable truth. Remember when Obama won? Hope and Change. What was Clinton's message? Shit sandwich. It was honest, but voters don't reward honesty.

          • But the way forward is to present something better, not just "not Trump".

            To be fair, that exact strategy worked really well for Biden.

  • Another to add to his list (Score:5, Informative)

    by quonset ( 4839537 ) on Saturday October 30, 2021 @06:23PM (#61943245)

    Of failed entities. 17 failed companies, including his only publicly traded company which never turned a profit [forbes.com] while he personally ran the company [marketwatch.com].

    If anyone thinks this time will be any different, they're just as stupid as those banks which kept lending him money.

    • Re: (Score:3)

      by fermion ( 181285 )
      Trump makes money off every deal. The DC hotel has lost money ever year, it if he sells it for $370 million he likely makes some money. Others may lose money, the banks, the contractors but he is good at generating an income. Everyone makes fun of the Apprentice he makes about $100K a year in pension payments.

      In this case a SPAC is a specialty financial tool that allows a firm to collect investments on an firm only listed on a major stock exchange, and can use the money to acquire a company that actual

      • Typically the SPAC does not have a going concern in mind. The SPAC is not allowed to have a going concern in mind which is the issue here.

        • Re: (Score:2)

          by fermion ( 181285 )
          I looked for rules and did not see any hard and fast regulation. I see typical, but not hard and fast backing for that part of the story.

  • Securities (Score:5, Informative)

    by michaelmalak ( 91262 ) <michael@michaelmalak.com> on Saturday October 30, 2021 @07:10PM (#61943367) Homepage
    Securities law, not security law

  • It's not like anyone is willing to hold him accountable for anything, so who cares? Trump probably used his security clearance to dig up dirt on every other lawmaker and is literally untouchable.

  • Shut up (Score:5, Insightful)

    by beepsky ( 6008348 ) on Saturday October 30, 2021 @08:21PM (#61943497)
    Can we fucking stop talking about Trump already? He hasn't been president for over a year
  • Remember that episode of X files where they visit the SEC and everyone's sleeping?

  • Special addendum (Score:2, Insightful)

    by Dracos ( 107777 )

    To Betteridge's Law of Headlines: when the question concerns Trump and the potential of his committing a crime, the answer is always yes.

  • Why is Slashdot so worried about this? (Score:4, Insightful)

    by Vandil X ( 636030 ) on Saturday October 30, 2021 @10:30PM (#61943679)
    Two stories in two days heckling over a social media network that is probably going to have no one on it.

    Why is Slashdot so worried about it?

    • Worried? That bozo is great entertainment.

      But don't worry, we're laughing with him. Absolutely. For real.

    • Why is Slashdot so worried about it?

      Slashdot doesn't worry about anything. Slashdot is a news aggregator that spits out stories of interest and it has a long history of running stories on financial fraud and OSS violations in the tech sector.

      Replace Truth with any other social media site and the story would still be here.

  • "Did Trump's Truth Social Network Skirt US Securities Law?"

    Oh, heaven forbid. That's unpossible!

  • That is the best porn actor name I've heard in a long time.

  • It has become painfully apparent that it just isn't a Trump project unless *some* law is violated or contract is breached. Anything done on the up-and-up is just way too far off brand.

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