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The Trump Media and Technology Group (TMTG) has previously announced that it has set up $ 1 billion with undisclosed investors once a future merger deal is struck, and it’s safe to assume that Nunes will get at least a nice salary as a CEO. However, one must marvel at an arrangement that takes him from the center of GOP power to a private sector post he does not seem qualified to fill.
With his well-established tendency to value loyalty over other traits, Trump’s hiring of Nunes comes from his old playbook. The question then becomes: What’s in it for Nunes? By accepting the post, he will forfeit his chance to chair the powerful House Ways and Means Committee if the Republicans take control of the lower house in the 2022 midterm election. However, the congressman should have face a tough re-election, with his current district being redesigned to include more Democratic voters. In this context, why not avoid all of this trouble, potentially making more money in the private sector and forging closer ties with the former president, who still holds considerable power over the GOP?
The answer to “why not†may lie in the risk of going all the way into Trump’s media enterprise. While it has yet to do business in the traditional sense, the Trump Media and Technology Group has already caught the attention of the SEC. The problem is complex, but the bottom line is that federal regulators are studying a deal for TMTG to merge with another entity called Digital World Acquisition, a special purpose acquisition company (SPAC).
A SPAC is sometimes referred to as a blank check company because it does not carry out any activity beyond what is necessary to raise capital. It sells shares to investors through an initial public offering with the intention of subsequently merging with a private company as part of a process that allows the private company to go public more quickly.
Since they are essentially buying a pig on the fly, PSPC investors rely heavily on credentials from the creators of a PSPC. When famous mogul Richard Branson created one, his history of resounding successes with Virgin Group undoubtedly added to the appeal of the offering. But shares in Branson SPAC, known as VG Acquisition Corp., rolled a roller coaster in 2020 before finally finding a merger partner. So far, things seem to be going pretty well, as the merger has given Branson the chance to get into a real business with some cash flow.
SPAC Digital World Acquisition is led by Patrick Orlando, who worked at German Deutsche Bank and founded his own investment bank, and is backed by a number of large hedge funds. But the Securities and Exchange Commission has already launched an ongoing investigation into Digital World Acquisition, asking for information about its deal with TMTG. SPACs are supposed to raise capital before a merger is planned, and Digital World Acquisition may have circumvented securities laws by discussing a potential deal before it was made public without disclosing it.
In a December 6 filing, Digital World said it received a document and an information request from the SEC, including documents relating to its board meetings; its trading policies and procedures; and the identification of bank, telephone and electronic addresses as well as the identity of certain investors.
Digital World said it cooperated with the request, adding that, according to the SEC, the investigation does not mean that federal regulators have “concluded that someone has broken the law or that the SEC has a negative opinion of DWAC or any person, event or security “. Trump Media and Technology Group did not respond to requests for comment.
PSPC investors who were initially drawn to Orlando’s financial credentials might not feel reassured by Trump’s business background, although he certainly has loyal followers who will want to get into the business. After the Jan.6 attack on the United States Capitol, Trump was banned from social media platforms like Twitter and Facebook, limiting his ability to spread disinformation and hijack the news of the day. Trump railed against these tech companies, saying they prohibited free speech. When two radio hosts who had previously been on “The Apprentice” pitched Trump with the idea of ​​a new conservative media company, they agreed to form a company and merge with a SPAC, reports The New York Times.
Trump, however, is infamous for his many bankrupt and bankrupt companies, including one involving a state-owned company trading under the ticker symbol DJT. In this case, the company gave Trump a nice bonus and paid to maintain his jet before declaring bankruptcy which cost investors dearly.
As for Nunes, his CV is political, not corporate. A Republican first elected in 2002 at the age of 29, he was re-elected every two years thanks to California’s 22nd Congressional District, which has a Republican leaning. Early in his career, he sponsored bills to help his constituents, especially dairy farmers. (Her own family has a history in the industry.)
Later, Nunes started to show a more fiery side. In 2010, he published a book in which he called climate change warnings “hysteria” of an “end of the world cult”. In 2014, he sued fellow Republican Justin Amash after Amash criticized US security oversight. He called his colleague “Al Qaeda’s best friend in Congress.”
Although he rose through the ranks to become chairman of the House Intelligence Committee, Nunes did not have a true national profile until he became one of Donald Trump’s most staunch supporters. He ended up looking like the former president as a thin-skinned, hyper-combative public figure. Nunes sued numerous news agencies, including CNN, as well as a GOP consultant and fruit grower who Nunes said insulted him. He even went to court to try to silence an unknown person who operated a parody social media account by the name of Devin Nunes’ Cow.
Earning the post of CEO of a media company could be Nunes’ reward for years of service to its chairman. How much of a reward that will be is for everyone to guess. But according to the company’s own documents, TMTG projects revenue of $ 3.6 billion by 2026.
Of course, this is all speculation right now. Yet, before betting on this team, investors would be wise to do their due diligence as to who will be holding the blank check book.
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