Expert: Truth Social IPO risky for investors but 'risk facing the country is even greater'

26 March 2024

Former President Donald Trump's Truth Social platform went public this week (trading as "DJT" on the Nasdaq Composite), and its initial public offering (IPO) is likely to deliver a $3 billion windfall to the ex-president with it currently trading at roughly $70 per share. But one ethics expert argues that the overvalued stock could also prove harmful beyond just the stock market.

This isn't the first time Trump has tried to take one of his companies public. In the 1990s, his company Trump Hotel and Casino Resorts was publicly traded. And while Trump himself reaped the benefits of that IPO, investors got soaked as the company lost hundreds of millions of dollars over a few short years before eventually becoming a penny stock. In a Tuesday column for MSNBC, former George W. Bush White House ethics lawyer Richard Painter made the case that if he's elected, Trump's IPO could prove to become a headache for more than just investors.

"As considerable as investors’ risks are, however, the risk facing the country is even greater," Painter wrote. "On top of the multiple civil judgments and criminal cases still pending against him, Trump’s third presidential run already threatened to bring back the legion of conflicts of interest surrounding his real estate business. Now, add to that a social media company."

Painter reminded readers that should Trump win a second term in the White House, a US president would have a controlling share over a major social media platform, giving that platform outsized influence over the national political discourse. And because Trump would have discretion over who serves on the board of the Federal Communications Commission (FCC), which regulates media mergers, Painter argued there was a possibility that Trump could use his power as president to prop up Truth Social as a major player in the social media market — and by extension, cement himself as a media giant as well as a head of state.

"With many Americans getting their news from social media, it’s about our political future. Backed by the power of the presidency, the Truth Social deal could be yet one more step in the consolidation of American social media in the hands of a few men who will have an outsize influence over the American electorate for decades to come," Painter wrote.

"The FCC, of course, is supposed to prevent such consolidation of power in media. But with Trump in the White House, any FCC commissioner who dares try to do their job will likely find the path blocked by the White House," he continued. "And the Supreme Court, increasingly enamored of a “unitary executive” theory of the presidency, could tell Trump that he can do just that."

Painter's commentary is particularly noteworthy given his role as an ethics expert for a previous Republican administration. Presidents are typically expected to divest themselves of any business stake that could be seen as a conflict of interest. Jimmy Carter, for example, put his peanut farm into a blind trust when he took office, which was deeply in debt after he left the White House in 1981.

The former White House lawyer wrote that Americans can't do much about the Truth Social IPO now, but that electing a president "committed to democracy" can prevent a scenario like the one he described.

"History has shown that Trump is about as good at respecting democracy as he is at respecting the interests of his investors," Painter wrote. "For those who vote for him and those who invest with him, the result may be pretty much the same."

Click here to read Painter's full op-ed.

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