🗞️ What's The Truth Behind Trump's Truth Social?
This week: Trump Media is under federal investigation, SoftBank's COO wants a bigger payday, and CalTech is lawyering up. Plus, alternative legal providers, a Tennessee mistrial, and Cravath gets an update.
Add another federal investigation to former President Donald Trump's growing list. This latest one is over a plan to take his new social media company, Trump Media and Technology Group (TMTG), public through a special purpose acquisition company (SPAC). The deal, between TMTG and Digital World Acquisition Corp (DWAC), is facing scrutiny from both the SEC and FINRA about financial impropriety. If the deal is approved, however, it could raise about $300 million for Trump's Twitter clone, Truth Social.
Patrick Orlando, CEO of DWAC, took part in a video call with Trump Media back in May, ahead of the deal's October announcement. However, Orlando also runs several other SPACs, so it is unclear who he was representing at the time.
According to the New York Times, an SPAC is not supposed to have a deal arranged before selling its shares to investors. However, the SEC investigation has requested “certain documents and communications” between DWAC and Trump to uncover the exact timeline of events. that happened.
FINRA is further investigating some trading that occurred at DWAC before the October 20 announcement of the merger, reports The Verge.
California Congressman Devin Nunes announced that he would resign from the House to become the chief executive of Truth Social, says Variety. The Republican Congressman is the ranking member of the House Intelligence Committee and a top Trump ally.
Clearly lawsuits and criminal investigations don't faze the former president. By recruiting Rep. Nunes, however, it does seem that Trump is trying to further the Big Lie that the 2020 election was stolen, and potentially that future elections will be stolen too?
The C-suite at SoftBank is going through a bit of turmoil. Chief Operating Officer Marcelo Claure is locked in a pay dispute with the Japanese conglomerate's founder and CEO Masayoshi Son. Claure is seeking $2 billion in compensation over the next several years—SoftBank has a market capitalization of about $85 billion—but Son seems to be willing to offer something in the range of eight-figures.
According to the New York Times, Claure is prepared to leave SoftBank should he not get the compensation he's asking. As Claure contests, the compensation is directly related to the value his relationships bring to the company.
SoftBank's share price has been sinking recently as several key investments (including WeWork, Alibaba, and others) have lost the company money and/or left SoftBank's shareholders unhappy, notes TechCrunch.
The New York Times also reports that Claure has been personally investing in companies that SoftBank backs—therefore greatly increasing the values of his own personal shares. "You’re walking terribly close to the line between legal and illegal and ethical and unethical,” Aswath Damodaran, professor at the NYU Stern School of Business, said of the uncommon (though not unheard of) behavior.
$2 billion in compensation, even if over a few years, is…a lot. Also, the gap between Claure's figures and Son's is very wide. Claure is clearly playing hardball here, knowing full well that if he leaves SoftBank it'll significantly hurt the company. But will Son fold?
Southern California's brain trust Caltech is taking global electronics giant Samsung to court over patent claims. Caltech asserts that Samsung infringed upon five of its data transmission patents when it used the tech for its WiFi chips that are found in Galaxy smartphones, tablets, and watches, as well as in Samsung TVs and refrigerators. The initial complaint was filed in a Texas federal court.
"By reason of Samsung’s infringement, Caltech has suffered substantial damages," said CalTech in the complaint, notes The Street. "Caltech is entitled to recover the damages sustained as a result of Samsung’s wrongful acts in an amount subject to proof at trial."
Caltech sued Apple and chipmaker Broadcom for similar patent infringements in 2016. A jury awarded the university a combined $1.1 billion in royalties from the two tech giants in June 2020, reports Reuters. However, both companies have appealed the decision, which has in turn paused a separate lawsuit Caltech filed against Microsoft for patent infringement.
This seems like a case of David (Caltech) vs multiple Goliaths, and yet, Caltech seems to have a strong enough case that a federal jury already awarded it over $1 billion.
📤 What Else We're Forwarding
Legal Trends: The pandemic has largely reshaped in-house legal departments for many businesses, reports Bloomberg Law. One of the biggest trends is leveraging legal technology and strategic business partners for alternative legal operations.
Tennessee Retrial: The Tennessee Court of Criminal Appeals has ruled to give a Black man a new trial, says the ABA Journal. Why? The man was convicted by an all-white jury that deliberated in a room adorned with "mementos of the Confederacy."
Undoing Lockstep: New York white shoe firm Cravath, Swaine & Moore LLP will be moving away from its seniority-based compensation system, according to the Wall Street Journal. Cravath was one of the final law firms to retain the traditional "lockstep" pay model in lieu of more modern compensation structures.
🎧 Music we’re working to
Today we’re listening to Kaidi Tatham, a composer and musician hailing from the UK. Tatham’s virtuosity has attracted a range of collaborators including Amy Winehouse, Macy Gray and Slum Village. We’re listening to his newest LP, An Insight to All Minds, released this April 21. In this record, he jumps from genre to genre, all while keeping a structured vibe with his trademark percussion and base. You’ll travel through jazz-funk, samba and spacey electro throughout the 15 tracks, and enjoy every minute of it.
How would you rate this week’s newsletter? 🤔
See ya next week!