The media company that recently took Donald Trump public is suing its co-founders, accusing them of their “sensational failure” to get the company off the ground and then trying to “close the deal.” thwart”.
The lawsuit, filed in Sarasota County, Florida, is set to be barred from civil court Trump Media & Technology Group Co-founders Wesley Moss and Andrew Litinsky from appointing members to the company’s board of directors – or owning shares in it.
Moss and Litinsky claim that an agreement Trump signed in 2021 with a company they founded, United Atlantic Ventures, LLC, guarantees them an 8.6% stake in Trump Media’s total stock, undiluted by the issuance new shares.
At DJT’s closing price on Tuesday, this stock would be worth about $601 million.
In February, Moss and Litinsky sued Trump Media in Delaware Chancery Court over their involvement in the company.
The lawsuit was filed in late March, around the same time as the shell company’s shareholders Digital World Acquisition Corp. voted to approve a merger with Trump Media, a private company behind the fledgling social media app Truth Social.
Following the special-purpose merger, shares of newly public Trump Media traded under the ticker symbol DJT and rose as much as 50% in their Nasdaq debut last week.
But the share price fell sharply on Monday after the company reported a net loss of $58.2 million in 2023.
Trump Media’s lawsuit, filed in Florida, asks the court to award it damages for Moss and Litinsky’s “breaches of fiduciary duty.”
In addition to Moss and Litinsky, the lawsuit names DWAC founder Patrick Orlando as a co-defendant and accuses him of participating in these violations.
According to the Florida lawsuit, Moss and Litinsky were responsible for establishing Trump Media’s corporate governance structure, preparing for the launch of Truth Social and finding a shell company for a merger to take the media company public, it says of the lawsuit.
Moss and Litinsky failed “at every turn,” Trump Media claims of the two men, both former contestants on Trump’s former reality TV show “The Apprentice.”
They made “wasteful decisions” that caused “significant harm” to Trump Media and a decline in DWAC’s stock price, the company claims. And they chose to merge with Orlando’s Benessere Capital Acquisition Corp. despite a business dispute with DWAC that ultimately triggered an investigation by the Securities and Exchange Commission, according to the lawsuit.
Moss and Litinsky then decided to retaliate on the eve of the merger vote between Trump Media and DWAC by suing the soon-to-be-public company, according to the lawsuit, first reported by Bloomberg.
Trump Media calls the claim that UAV owes stock “baseless” and says the services agreement Trump signed with UAV in 2021 is no longer valid.
According to the lawsuit, after Trump’s representatives raised concerns about the agreement in July 2021, Eric Trump sent a letter to UAV saying his father believed the agreement was “void.” UAV has reportedly “accepted” the elder Trump’s decision to terminate the contract.
Trump Media’s lawyers did not immediately respond to CNBC’s request for comment on the lawsuit. Litinsky and Moss could not immediately be contacted.
Source link
2024-04-03 00:15:23
www.cnbc.com