Legal Drama Unfolds: Trump Media Battles Co-Founders in Ownership Dispute

📝 SUMMARY: Trump Media & Technology Group ($DJT), recently made public by Donald Trump, has initiated a lawsuit against its co-founders, Wesley Moss and Andrew Litinsky, in a Sarasota County, Florida, civil court. The legal action stems from accusations of the co-founders' failure to effectively launch the company and subsequent attempts to obstruct a crucial deal. Central to this contention is a 2021 agreement, wherein Trump supposedly assured Moss and Litinsky an 8.6% stake in Trump Media, undiluted by new share issuances, valued around $601 million based on recent closing prices.

This legal battle unfolds as Trump Media, known for the social media app Truth Social, merged with the shell company Digital World Acquisition Corp., resulting in Trump Media's stock (ticker DJT) soaring up to 50% on its Nasdaq debut, despite a subsequent drop after revealing a $58.2 million net loss in 2023.

The Florida lawsuit accuses Moss and Litinsky, both alumni of Trump's reality TV show "The Apprentice," of gross mismanagement, including "wasteful decisions" that significantly harmed Trump Media and impacted DWAC's stock price. Additionally, their choice of merger with Benessere Capital Acquisition Corp., despite a conflicting business interest with DWAC, allegedly triggered a Securities and Exchange Commission investigation.

In a dramatic turn, Moss and Litinsky's lawsuit in Delaware Chancery Court for their stake came just as Trump Media was on the verge of going public through its merger, a move Trump Media decries as retaliatory. Trump Media disputes the legitimacy of the stock ownership claim, declaring the 2021 services agreement invalid after Eric Trump communicated his father's decision to void the contract, a decision UAV seemingly accepted without contest.

As Trump Media seeks damages for alleged breaches of fiduciary duty, including co-defendant Patrick Orlando, DWAC's founder, the legal outcome could significantly impact the company's governance and ownership structure. The ongoing legal dispute underscores the intricate challenges and controversies surrounding Trump Media's corporate governance and strategic direction.

🔍 SOURCE: https://www.cnbc.com/2024/04/02/trump-media-sues-its-co-founders-accuses-them-of-severe-mismanagement.html