You can’t pull valuations like that out of your ass, which is what they obviously did here. It’s classic pump-and-dump material. And I don’t care if they got some MAGA-moron accountants to give it their blessing. This is akin to Trump testifying that his net worth changes by billions of dollars each day depending on his mood (which he actually testified to).
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DWAC had 29.3 million shares to work with, which were valued at $10 apiece due to being backed by $293 million in cash. If they paid 10 million shares, worth $100 million for 11.4% of TMTG, then TMTG was acquired at a valuation of $875 million for the whole thing. The extra $825 mil earnout would, again, be the option to “earn” another 82.5 million shares of DWAC.
Again, no there there in that deal since TMTG has no revenue and no products and no assets, but not fraudulent, because nasdaq imposes no requirement that the “real” company a SPAC acquires actually do anything. Caveat emptor.
Common sense ethics-wise this is a scam.
But legally is it? Is it sufficiently bad for an investigation and prosecution?
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If you pay an artificially-inflated price to acquire a bullshit asset with Trump’s name on it and announce that artificially-inflated asset price as a valuation of the bullshit asset in order to pump and dump a bunch of shares, that’s securities fraud.
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Where’s the artificial and where’s the inflation? No one disputes that DWAC has $293 mil in cash. You want this to be fraud, and from a common sense viewpoint it is fraud, but I do not think it is securities fraud, nor any other kind of prosecutable fraud.
Lets also note that this deal is still subject to “regulatory and stockholders approval”, and we haven’t seen the paperwork (always read the footnotes!) to know the actual terms of the deal. This thing has traded everwhere from $69 to $157 today, and people are effectively buying it blind on the premise of a deal.
There’s no asset that’s remotely viable at that purported valuation. They’ve simply taken a bunch of money, handed it over to Trump so they can make an announcement about how insanely valuable their new acquisition is, and offloaded a bunch of shares at the newly artificial price. May as well have announced that they have acquired Trump’s Dumps in a deal valued at eleventy billion dollars. Only the finest Dumps.
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We’ll have to disagree there. The ability to deliver an audience of 30-50 million devoted gullible monetizeable morons has considerable value. One could even make an argument they underpaid. Some top pro athletes are getting 9 figure endorsement deals.
Now, I have zero confidence in the ability of any TFG led organization to build a viable social media site, nor in his commitment to such an effort once he’s got his cash out, but the premise is real.
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Trump shut down his post-presidential blog in less than a month due to it being embarrassingly undertrafficked.
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Inappropriate platform. On other platforms he delivered in spades.
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Mostly bots.
If it was just bots they wouldn’t have shut him down. There was sufficient real engagement for him to be dangerous.
Thanks for the back-and-forth. Much more enlightening and informative than anything I’ve been looking at on TV or online.
Time for a Tx/Coin show !!!
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Stepping gingerly into this because I don’t know anything about securities fraud… but the site that Parscale put up earlier was nothing like what is being promised for this new venture. Not even remotely, because it wasn’t built around “engagement.”
This new project is supposed to be the MAGA alternative to Twitter or FB, which could at least theoretically attract an audience where other conservative-focused social media platforms like Parler and Gettr have failed. They have failed because Trump isn’t participating on those platforms! The tease is that he would participate on this new one. That’s critical. There is an actual potential audience out there, which is the basis for a valuation.
“Theoretically” monkeys might fly out of my butt. It’s not the standard for securities fraud.
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Mark Sumner, Daily Kos:
TMTG isn’t a social media platform. It’s a scam. Trump doesn’t need another social media platform. He needs suckers willing to buy stock . And Trump has always been very, very good at locating suckers.
Not every SPAC is a scam. They really can be a means of quickly connecting investors to rising companies that aren’t yet at a stage that would allow them to get onto the exchange through more traditional means. But of the $82 billion raised through SPACS in 2020, a large amount is either super speculative investment or an outright scam. Which lead the Harvard Business Review to note last February that the SPAC bubble was looking very fragile. Once it became clear that this was a way to drub investors for ready cash, everyone wanted in.
Trump isn’t being innovative in his technology. He’s not even being innovative in his scam. In a lot of ways, he’s late to the SPAC party. But it’s way past time for the SEC to put some serious restrictions on these backdoor listing schemes and blank check companies.
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Explain to me which investments are not forward looking, because apparently that is your argument for fraud.
Shut down before he gets the first pack of lies assembled. Love it!
The alleged valuation of the company is not a forward-looking statement. Even if it was a forward-looking statement, the securities fraudsters here could not take advantage of that safe harbor because they did not make any of the required disclaimers about forward-looking statements. It probably also doesn’t apply because the SPAC seems likely to qualify as a “blank check company.”
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I didn’t say that. I asked a question. And the point is moot since you’ve recognized the legal flaws in your original argument which I was going get to next.
Ah, foiled by my own legal flaws. Curses!