MW Will Trump have to sell his 'DJT' stock before the inauguration?

By Chris Matthews

'The government ethics program is dead,' says former Office of Government Ethics director

Donald Trump's social-media company doesn't earn very much money, but that hasn't stopped investors from buying up the stock in droves.

Trump Media & Technology Group Corp. $(DJT)$, parent company of Trump's social-media platform Truth Social, is valued at $7.8 billion, despite posting only $1 million in revenue in the third quarter.

Shares in the company have risen more than 87% year to date to trade at about $32.90 per share Monday, though they are down from their March closing high of $66.22, according to FactSet.

Trump owns the majority of those shares, and ethics experts see the stock as a means for private Americans and foreigners to buy influence.

"It's a company that seems severely overvalued, and it raises questions about whether people are investing in it so that they can curry favor or influence over him, which raises concerns about foreign actors, many of whom could be state actors," Walter Shaub, former director of the U.S. Office of Government Ethics, told MarketWatch.

For decades, U.S. presidents have worked assiduously to prevent the appearance of conflicts of interest by divesting their assets or placing them in blind trusts, Shaub noted. Trump bucked this trend by maintaining his ownership of the Trump Organization and various real-estate holdings after assuming office in 2017.

The Trump transition team didn't respond to requests for comment.

"Donald Trump has greatly expanded his ability to be bought and the opportunities for corruption," said Jordan Libowitz, communications director for Citizens for Responsibility and Ethics in Washington (CREW), a watchdog group.

He noted that Trump Media's stock now makes up the majority of Trump's net worth, as the company's financials shows he owns 52.9% of the enterprise.

"What is stopping the Saudi wealth fund, the Qatar wealth fund or the Emirati wealth fund from pumping huge amounts of money into it for his favor - or if they already have, threatening to dump all of that stuff on the market, thus crashing his net worth?" Libowitz told MarketWatch.

Federal law requires executive-branch employees to recuse themselves when their official role would conflict with their financial interests, but these strictures do not apply to the president or vice president.

It is also unclear how these laws would be enforced for other officials like cabinet secretaries, given that it would fall to a Trump Justice Department to hold them accountable.

Many market observers see parallels between Trump Media and meme stocks like GameStop Corp. $(GME)$ and AMC Entertainment Holdings $(AMC)$ - stocks that shot up in value, divorced company fundamentals.

Economist and former Clinton administration official Brad DeLong wrote in a blog post last week that people buying Trump Media's stock in the early days of 2022 and 2023 "were betting either that it would be a successful and profitable media business or simply pledging meme-stock allegiance to Donald Trump," but added that the recent surge may be due to other factors.

"I think the bet is that the people who own DJT today are people who think that in a future in which Trump is president again, being recorded in the stock book as owning DJT will be a good way of demonstrating that you are willing to bribe Donald Trump in order to get supportive action from the government," he wrote.

The U.S. Constitution forbids presidents from accepting payments from foreigners, or from domestic officials like state governors. These proscriptions are known as the emoluments clauses.

During Trump's first term, CREW, as well as the attorneys general of Maryland and the District of Columbia, sued the president, arguing that he violated the clauses by accepting payments from foreign and domestic officials to stay at the Trump International Hotel in Washington.

Those lawsuits became moot once Trump was no longer in the White House and were thrown out by the Supreme Court, but CREW did receive favorable opinions from two federal appeals courts that leave the door open for future lawsuits.

Investors in Trump Media would be wise to track any litigation on the topic closely, as Democrats will look to capitalize on the impression that foreign or domestic officials will try to influence the president through buying or selling Trump Media stock.

Last month, Democrats on the House Committee for Oversight and Accountability released an investigation showing that Trump earned millions from foreign and domestic officials who stayed at Trump-owned properties during his administration.

Meanwhile, ethics watchdogs see Trump's resounding victory in last week's presidential election as the American electorate endorsing Trump's casual attitude towards the responsibilities of public office.

"The government ethics program is dead," former OGE director Shaub said. "There's not even an aspiration to prevent officials from profiting from their offices. That was choice a narrow majority made in this election."

-Chris Matthews

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November 11, 2024 14:21 ET (19:21 GMT)

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