Two co-founders of Trump Media & Technology Group Corp (NASDAQ:DJT) filed a lawsuit against former President Donald Trump over the valuation of their stake in the company and dilution.
The duo is now challenging the timing to wait to sell company shares.
What Happened: Trump owns around 60% of the newly public media company. The quadruple-indicted Republican presidential nominee could benefit from being able to sell shares ahead of a six-month share lockup.
The proceeds are expected help Trump pay down a $454 million-plus judgment from his New York civil fraud case. Trump posted a $175 million bond in that case to avert potential asset seizure by the state.
Trump Media & Technology Group (TMTG) co-founders Andy Litinsky and Wes Moss are challenging the share lockup and accusing Trump of retaliating against their previous lawsuit by locking their shares up for six months.
A Delaware judge approved a request by Litinsky and Moss to add the retaliation claim over the lockup to their existing case against Trump, according to a report from Bloomberg. A lawyer for Moss and Litinsky said the lockup is causing "irreparable harm" for the duo as they are not able to sell their stake in the company.
The previous case against Trump centers on the 8.6% stake owned by the co-founders and accusations of Trump trying to dilute their stake in the media company.
Trump filed a countersuit against Litinsky and Moss over the process the company was set up with prior to the SPAC merger.
Related Link: EXCLUSIVE – Trump Media Company Goes Public, Financial Experts Say DJT A ‘Meme Stock’ — ‘This Is Going To Be A Way To Bet On Or Against Trump’
What's Next: Trump could be deposed in this case from the TMTG co-founders soon, according to the report.
A potential date of April 15 proposed by lawyers for Litinsky and Moss interferes with the start date for Trump's hush money criminal trial set to begin in New York.
"We believe that discovery is not appropriate at this juncture, and look forward to litigating this matter in an orderly fashion," Trump Media lawyer Ted Kittila said.
Lawyers for TMTG said share lockups are common for SPAC mergers and Litinsky and Moss being allowed to "dump" shares could "harm the company and other stockholders."
Coincidentally, several financial experts expected TMTG to change the guidelines to allow Trump to sell his shares earlier than the six-month lockup.
A change of the lockup agreement timeline for Moss and Litinsky could potentially open the door for Trump to sell shares early.
DJT Price Action: Shares of Trump Media & Technology Group have been volatile over the last week after reporting company financials. Shares of the company have fallen over 22% in the last five days and are down over 50% from highs set after their March public debut.
DJT shares trade at $37.30 at the time of writing, versus a 52-week trading range of $12.40 to $79.38.
Read Next: Here’s How Much Trump Lost After His Newly Listed DJT Stock Erased All Gains Since Public Debut
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