Donald Trump’s Post May Have Just Broken the Law

Donald Trump's Post May Have Just Broken the Law

Former President Donald Trump may have found himself in hot water after a recent social media post in which he said that the company held over “$200 million in cash and zero debt” and that its follower count was “growing fast.”

Observers scrutinize the message closely, comparing it against the legal standards set for communication by public figures.

Legal experts are weighing in, analyzing the possible implications of Trump’s words.

Michael Klausner, a law professor, suggests that Trump’s statement about TMTG Truth Social’s stock might break the rules set by the SEC, the agency that oversees the stock market.

He said “A false statement of ‘material’ information is securities fraud,” Klausner said while warning it could be a case of “pumping.”

“Pumping is a term used to refer to such a statement, but not necessarily by a company insider, as in Trump’s case,” Klausner added.

Klausner pointed out that Trump’s use of “growing fast” could be unclear and possibly misleading without real evidence of growth, especially given the financial issues the company faces.

“If it is growing slowly and Trump calls it ‘fast’ there is some room for the SEC or a court to decide,” Klausner said. “It would be a judgment call.”

The debate is not just about what was said but also about the consequences that words can carry, especially when spoken by someone with considerable influence.

Trump’s claim that Truth Social has “over $200 million in cash and zero debt” has raised questions about the accuracy of financial disclosures.

Donald Trump's Post May Have Just Broken the Law
Donald Trump’s Post May Have Just Broken the Law

Trump on his social media wrote ” All of the competitors to TRUTH SOCIAL, especially those in the Radical Left Democrats Party who are failing at every level, like to use their vaunted “disinformation machine” to try and convince people, and it is not easy to do, that TRUTH is not such a big deal and doesn’t “get the word out” as well as various others, which they know to be false.”

“I THINK TRUTH IS AMAZING! First of all, it is very solid, having over $200,000,000 in CASH and ZERO DEBT. More importantly, it is the primary way I get the word out and, for better or worse, people want to hear what I have to say, perhaps, according to experts, more than anyone else in the World.”

“My TV ratings are by far the highest, and my Rallies are not equaled, even close, anywhere or by anyone. Look, I had hundreds of millions of followers on various platforms, and could have them back again, but was cancelled for largely political reasons.”

“Those platforms all want me back…They need me back! On Truth I have 7,000,000 followers……”

In securities law, it’s essential that public companies provide truthful and accurate financial information. If Trump’s statements are found to be misleading, this could constitute a violation of the Securities Exchange Act of 1934, specifically Section 10(b) and Rule 10b-5.

These rules prohibit making any untrue statement of a material fact or omitting to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading.

According to Kin Lo, CPA Professorship in Accounting at UBC Sauder School of Business, the claims made by Trump might be true.

“My opinion is that the [$200 million in cash and zero debt comments that Trump made] are probably correct,” Lo said.

“The company had only $2.5 million in cash and $70.1 million in liabilities as [of] December 31, 2023,” Lo Added.

Historically, similar cases have resulted in fines, legal actions, and even criminal charges against the individuals or companies involved.

For example, the Securities and Exchange Commission (SEC) has previously charged executives and companies for making false and misleading statements about their company’s financial status, leading to penalties and required corrective actions.

About the author

Nancy Beverly

Nancy Beverly is a prominent political journalist and editor at World-Wire, known for her sharp analysis and deep understanding of global politics. With a Master's degree in Political Science, she excels in breaking down complex political issues, making them relatable to the public. At World-Wire, Nancy crafts compelling political narratives covering everything from local governance to international relations. Recognized for her expertise, she received the 'Excellence in Political Journalism' award in 2021. Nancy's work not only informs but also enriches her readers' understanding of political dynamics.

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