Don't Get Excited About Regulators Probing Trump's Social Media Company

News came out this week that federal regulators were "probing" Donald Trump's new social media company and the entity that acquired it, Digital World Acquisitions, and that they requested an assortment of financial documents on Monday. But the truth is that there is no alleged wrongdoing, and this is really standard for these types of transactions. While wrongdoing could be found, the chances of that are unlikely and people need to temper their expectations about what could happen. Ring of Fire's Farron Cousins discusses this.

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*This transcript was generated by a third-party transcription software company, so please excuse any typos.

I wanted to take a little bit of time here to talk about the investigation by the Securities and Exchange Commission into Donald Trump's truth social and the acquisition of that company by digital world acquisition. As we all know at this point, it was announced earlier this week that the Securities and Exchange Commission, the SEC was in fact probing the deal. They didn't wanna call it an investigation because it is not an investigation, as they say. They didn't wanna imply in any way that they believe any party had actually broken the laws. So the reason I even want to talk about this is to kind of clear the air because I've seen a lot other folks kind of jump on this story and, you know, push it out there with, you know, oh my God, look, he's under investigation. They're not. They're not and I am unfortunately here to throw cold water on everybody's expectations about what's happening with this particular investigation.

Now I have talked to some friends of mine that actually work in the financial industry. What they've told me and what other, you know, articles have said about this, this is really pro forma stuff. Like this literally happens all the time, especially when you're dealing with high profile clients and high dollar amounts into the billions the SEC will usually look at this and say, okay, look, we got a lot of money going around. There's high profile people involved. We're just gonna take a look. So give us your documents. We're gonna comb through 'em real quick just to make sure everything's cool. That happens frequently. It is not any indication at all that they even believe any party involved may have committed a crime. However, there is of course that little asterisk there, there is a potential for insider trading in trades like this. So that is something that obviously the SEC does want to take a closer look at.

And here is how that works. Now, bear with me because finance is very stupid. I hate it, but I've gotta try to explain it so everybody can understand. When you have an acquisition company like digital world, all the people put their money into the company and then once all the money is in, you know, you don't get know what's happening before you put your money in, that's the key. So you've put your money into the big pot. Once all the money is in the pot, then they go and make the acquisition. So even if you don't like the acquisition, your money's already in the pot, you're a part of this. You don't get to know what the acquisition is going to be prior to the pot being spent. Likewise, you have to buy the stock before the acquisition target is named.

And if anyone was given any kind of information that the acquisition target was going to be Trump's company and then purchased stock afterwards, that would be considered insider trading because after all, the shares of this stock started at $10. They jumped all the way up to $97. Now they're hovering somewhere around $47. So from 10 to 96 to 47, so, you know, it went way up and then it lost half its value. But either way, those are just little bitty things that they look for when they do these, you know, so-called pro forma probes and investigations. There's likely not any kind of criminal conduct here. And I only say that because even though Trump is involved.