Topline
Former President Donald Trump’s Trump Media & Technology Group is suing two of its co-founders, accusing the two of several business failings and arguing they should not receive their collective 8.6% stake in the media company—a suit that comes more than a month after the co-founders filed their own lawsuit claiming the company was trying to dilute their stakes.
Trump's stake in the company was worth $4 billion as of market close. (Photo by Spencer Platt/Getty ... [+]
Key Facts
Trump Media’s lawsuit, first reported by Bloomberg, characterizes Andy Litinsky and Wes Moss as “faithless fiduciaries” who failed to establish corporate governance at Trump Media and hindered the launch of Trump’s social media platform, Truth Social, causing damage to the media company in the process.
The lawsuit also accuses Litinsky and Moss of attempting to thwart Trump Media’s merger with Digital World Acquisition Corp., which set the company up to go public on March 26.
The lawsuit seeks restitution of the shares issued to Litinsky and Moss that the suit claims they “failed to earn,” in addition to damages for alleged breaches of fiduciary duty—the shares were valued at around $600 million mid-Tuesday afternoon, according to Bloomberg.
Litinsky and Moss sued Trump Media in late February, accusing the company of trying to dilute their shares ahead of its public listing through “11th hour, pre-merger corporate maneuvering” that would have increased the amount of authorized stock from 120 million shares to one billion.
The co-founders further alleged the former president and Trump Media planned to give new shares to Trump and/or his associates and children as part of a scheme that would have reduced Litinsky and Moss’ collective 8.6% stake to less than 1%.
Litinsky and Moss couldn’t immediately be reached for comment.
Big Number
$4 billion. That’s the former president’s stake in Trump Media as of market close Tuesday. The stake represents most of Trump’s net worth, which Forbes estimates at $5.9 billion.
Tangent
Venture capitalist Michael Shvartsman and his brother, Gerald Shvartsman, moved closer to potential guilty pleas Monday regarding an insider trading case linked to the Trump Media and Digital World Acquisition Corp. merger last month, according to CNBC. The brothers, who have pleaded not guilty to criminal charges of insider trading and conspiracy, will attend a change of plea hearing Wednesday, CNBC reported, noting such hearings typically involve defendants pleading guilty.
Key Background
Trump Media went public last week, significantly increasing the former president’s net worth. The company’s stock performed well in its first few days on the market but has since cooled off after tanking about 20% on Monday, when the company revealed full-year revenues of $4.1 million on a net loss of $58.2 million. Shares increased more than 5% on Tuesday and closed at $51.60. The company’s public listing came as Trump was faced with a deadline to pay part of a $454 million bond in a civil fraud case against him. The former president has since made progress in addressing the bond, posting a $175 million payment Monday. Trump cannot sell his shares in Trump Media for six months.
Further Reading
Trump Media Co-Founders File Lawsuit Claiming Company Tried To Dilute Their Stake (Forbes)
Donald Trump’s Net Worth Sinks $1 Billion As Truth Social-Linked Stock Tanks (Forbes)
How Did Trump Secure More Than $250 Million In Bonds? Here’s What We Know. (Forbes)
