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    Friday, June 21, 2024

    Trump Media co-founders challenging 6-month share lockup

    Two co-founders of Donald Trump’s social-media startup who sued over the value of their stake in the company now say the former president retaliated against them by barring sales of their shares for six months.

    A Delaware judge on Tuesday granted a request by Trump Media & Technology Group Corp.’s co-founders Andy Litinsky and Wes Moss to add the claim to their suit alleging Trump tried to dilute their 8.6% stake in the company, which operates his struggling Truth Social platform.

    Judge Sam Glasscock III said during a brief hearing that the amended suit will “fundamentally” alter the case, which initially sought to block Trump Media’s now-completed merger with a blank-check firm, Digital World Acquisition Corp.

    The merger last month added billions of dollars — at least on paper — to Trump’s net wealth. But Trump Media has lost some $2.8 billion in value since then as some of the retail traders who frantically bid up the stock began to sell. Trump, who owns a nearly 60% stake, is also subject to a lockup agreement that prevents him from selling for six months.

    The stock is down about 44% from its closing high of $66.22 on March 27.

    A lawyer for Litinsky and Moss, both former contestants on Trump’s TV show "The Apprentice," said at the hearing Tuesday that the lockup barring the co-founders from selling their shares is causing “irreparable harm” to the men.

    Litinsky and Moss have also said they’ll seek an injunction blocking a related suit Trump filed against them in Florida, which accuses them of botching the setup for Trump Media prior to the merger. The men claim that case improperly seeks to derail the Delaware suit, and should have been filed in the same court.

    The former president may be deposed in the case soon, adding to a burst of legal troubles stemming from the merger. Lawyers for Litinsky and Moss had scheduled the questioning for April 15, but that conflicts with the start of Trump’s first criminal trial, which starts that day in Manhattan.

    “The court has not approved any depositions, including of President Trump,” Ted Kittila, a Wilmington, Delaware-based lawyer for Trump Media, said in a statement. “We believe that discovery is not appropriate at this juncture, and look forward to litigating this matter in an orderly fashion.”

    In court papers, lawyers for Trump Media said Litinsky and Moss sought to improperly amend their Delaware suit so they could replace their existing claims with new ones rather than file a new complaint. Company lawyers said share lockups are common in blank-check transactions, and that allowing the co-founders to “dump” their stock on the market would “harm the company and other stockholders.”

    Glasscock said during an earlier hearing that he was “gobsmacked” to learn of Trump’s Florida suit, which he filed instead of bringing counterclaims against the two in Glasscock’s own courtroom. The judge said he would consider possible sanctions against the former president in Delaware.

    The civil suit against Trump is progressing as the former president faces four criminal prosecutions while campaigning to return to the White House in the November election. The case going to trial next week, brought by Manhattan District Attorney Alvin Bragg, alleges Trump falsified business records to conceal a hush money payment to a porn star before the 2016 election.

    Trump denies wrongdoing in all of the cases against and claims without evidence that they are part of a Democratic-led “witch hunt” to keep him from winning the presidency.

    Bloomberg reporter Bailey Lipschultz contributed to this story.

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