Trump stock earnout poses ethics concerns if he’s president, experts say

Donald Trump’s scheduled earnout through the parent company of Truth Social presents opportunities for outside interests if he were to defeat Joe Biden and become president again, according to experts.

Trump, who owns more than 50% of Trump Media and Technology Group‘s outstanding shares, is set to see an earnout of over 35 million shares from the holding company over at least the next year that would coincide with him potentially being president, according to a new disclosure filed to the Securities and Exchange Commission. That schedule of Trump’s financial earnings could lead to either foreign or domestic interests potentially investing in the company as a way to try to pressure and sway Trump while he’s commander in chief, the experts explained.

“I have a number of concerns,” said Virginia Canter, the chief ethics counsel for the watchdog Citizens for Responsibility and Ethics in Washington.

“Obviously, I would be most concerned about foreign interests that make significant investments in his company with an expectation that they will be given some sort of favored treatment when the need arises — even if it would threaten U.S. national security interests and historical alliances,” Canter said.

A spokesman for Trump did not return a request for comment before publication.

Trump’s earnings are under the condition that the stock has to hit a certain value within a specific time frame for the former president to see any of his owed shares. He’s also under a lock-up agreement which will disallow him from cashing out his shares for six months, unless he receives a waiver.

If Trump Media and Technology Group’s share price, for instance,  equals or exceeds “$12.50 per share for twenty (20) out of any thirty (30) trading days” from the recent closing date to go public and the 18-month anniversary of that agreement, Trump will be “entitled to receive 13,500,000 earnout shares,” according to the disclosure.

The new Trump media stock has been on a wild swing since it began trading. The share price soared as much as 50% when it started trading on the Nasdaq on March 26. Shares were down about 20% Monday.

“Whether or not he receives earnouts, the value of his stock can increase dramatically based on his own acts in office or by those seeking to gain his favor, including institutional investors and foreign entities,” Kedric Payne, a vice president and general counsel at watchdog Campaign Legal Center, said in a statement to CNBC. “Also, many investors may simply buy stock in the president’s company because they rationally expect that he will do everything in his power to increase the value.”

Payne said the overall stock price may fluctuate if there was an attempt to use an investment to try to influence Trump while he is president.

Trump could also “borrow against his own appreciated shares” and use it to self-fund his campaign, Peter Schiff, a veteran stockbroker, said in a post on X. He suggested that Trump’s supporters could end up buying the Trump company’s stock instead of donating to his campaign to help the former president finance his latest bid for the White House.

Such a move would arrive as Trump is struggling to raise money for his campaign while using donor contributions to help pay his extensive legal fees. He’s also expected to post a $175 million bond.

The stark reality of the stock price does not appear to reflect Trump Media and Technology Group’s overall business, which relies in large part on Trump and his followers to help it grow, according to another disclosure.

The company disclosed that it had a net loss of $58 million in 2023. It conceded in another document that its business plan relies on Trump’s popularity and his large social media following to make the move over to Truth Social for the company to have success.

Trump has just over 87 million followers on X but on Truth Social he has just under 7 million. Trump is ahead of Biden in the polls by only one percentage point, according to a Real Clear Politics polling average.

“In the event any of these, or other events, cause his followers to lose interest in his messages, the number of users of our platform could decline or not grow as we have assumed. To the extent users prefer a platform that is not associated with President Trump, TMTG’s ability to attract users may decrease,” the Trump Media and Technology Group wrote in a filing.