In 1995 Donald Trump bought 40 Wall St., down the street from the New York Stock Exchange. The property has proven to be the former president’s most durable connection to public markets.
Trump's complicated relationship with the public markets was in full view this week with the postponement of his potential plans to take his social media venture public. Trump Media & Technology Group had planned to go public via a merger with a SPAC (special purpose acquisition company), but federal regulators are probing the deal and may end up derailing it.
This would not be the first time Trump's dealings with Wall Street went awry. So, why don't Trump and the public markets mix? While Trump may long for the access to capital that comes with a market debut, being traded on the public markets comes with a big condition: regulators have much more power to look into questionable business practices of public companies.
“The public markets do require transparency, they do require filings with the regulators and so there are a lot of checks and balances," Reena Aggarwal, director of Georgetown’s Psaros Center for Financial Markets, noted recently in an interview about Trump.
The announcement in October that blank check company Digital World Acquisition Corp. (DWAC) would merge with Donald Trump's media company sparked immediate excitement from investors. The impending deal also caught the attention of regulators. By December, the Securities and Exchange Commission (SEC) was publicly looking into whether Trump’s company illegally negotiated with DWAC too early.
In a statement Thursday, Trump’s company said the SEC “has needlessly delayed its review of our proposed merger, causing real and unnecessary financial harm to DWAC investors.”
‘It’s the New York Stock Exchange’
This was not the first time Trump courted Wall Street. He led a public company beginning in 1995 when Trump Hotels and Casino Resorts began to trade under the ticker DJT.
“This is such a big day for us, it’s the New York Stock Exchange,” Trump said at the time.
DJT's stint on the exchange quickly soured, with its stock falling below its IPO price by 1997. Seven years later, the company was bankrupt and delisted from the exchange.
Trump's questionable business practices may have precipitated that downfall.
In 2016, the Washington Post looked into how, despite losing money every year, the company paid Trump handsomely and apparently shifted funds and assets between his public and his private business in ways that benefited him greatly but undermined his shareholders. Forbes also reported on that period and found that it “didn’t take long for Donald John Trump to betray his shareholders.”
Trump has declined to respond to specifics allegations relating to his tenure atop DJT but told The Washington Post at the time, “I make great deals for myself.”
The SEC also brought a case — which was later settled — alleging Trump’s company misled investors on an earnings report.
Back then, retail investors who admired Trump helped drive up the stock price but didn't receive financial rewards when the price crashed.
This year's SPAC drama echoes that time. DWAC has also lost money for retail investors and Trump fans over the last year. The stock hit an all-time high of $94.20 when interest in the company peaked; by Friday morning, it was trading at around $23 per share.
‘Private company anyone???’
Historically, Trump’s private organizations have faced consequences from a $2 million judgment against Trump’s foundation to a $25 million decision against Trump University. And last month, the Trump Organization’s long-time chief financial officer, Allen Weisselberg, pleaded guilty to fraud ahead of a criminal trial set for next month being prosecuted by the Manhattan District Attorney.
Meanwhile, New York Attorney General Letitia James has her own civil probe into Trump and his business.
Have his troubles made it hard for him to get cash? "While the company was under indictment, he was able to secure hundreds of millions of dollars of new loans and his balance sheet is now much stronger than it was at any point during his presidency," Dan Alexander, who has written a book about Trump's finances, recently told Forbes.
But Trump’s media company could be different. Truth Social — which Trump launched when he was kicked off Twitter in the wake of the Jan. 6, 2021 Capitol attack — is facing reports of serious financial difficulties, according to both Fox Business and Axios.
Trump's company denies the reports. In a recent Truth Social post, Trump bragged about his wealth and implied he might try to stay in his comfort zone: “Private company anyone???" he wrote.
If Trump’s SPAC deal does indeed fall apart, Trump's 40 Wall Street building may remain the closest Trump will get to stock traders anytime soon. Meanwhile, that property could exemplify his alleged wrongdoing — including potential claims that he misstated the value of his properties to suit his various needs.
Trump told lenders in 2012 that 40 Wall Street was worth $527 million, according to the Washington Post. But then he reportedly told tax officials it was worth less than one thirtieth of that: $16.7 million. That's the kind of about-face that might not be possible with shareholders to answer to.
Ben Werschkul is a Washington correspondent for Yahoo Finance.
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