Donald Trump Just Made Billions of Dollars But It's Too Late to Save Him

Former President Donald Trump just made billions of dollars, but it may be too late for the financial windfall to save him.

Shareholders of Digital World Acquisition Corp. (DWAC), an existing shell company, agreed to merge with Trump Media and Technology Group (TMTG) on Friday, clearing the way for the former president's company to go public without all the hoops of a traditional initial public offering.

With 79 million shares, Trump now owns more than 50 percent of the post-merger company. The stock opened at $44.49 per share when the market opened on Friday. At that price, Trump's overwhelmingly majority stake is worth over $3.5 billion.

But his Wall Street return is unlikely to save him from the $454 million judgment that New York Attorney General Letitia James is authorized to begin collecting on Monday. James has signaled that she's prepared to seize Trump's properties and bank accounts if he's unable to pay the judgment or obtain an appeals bond by the March 25 deadline.

Without a bond, Trump cannot stop James from enforcing the judgment while the federal appeals process plays out. On Monday, his attorneys told the appeals court that Trump could not find an insurance company to back the bond, despite approaching 30 underwriters. They asked that the court delay the posting of the bond until his appeal is settled.

Friday's vote may have put more than $3 billion into Trump's lap, but "lock-up" provisions could block Trump from cashing out on his multi-billion-dollar windfall. Lock-up provisions are common restrictions on Wall Street that prevent major shareholders from dumping their stock after a deal closes.

Most mergers prohibit major shareholders from selling, lending, donating or encumbering shares within the first six months of a deal to assure investors that these shareholders will not immediately cash out at the same time and tank the stock's price.

There is a chance that DWAC could waive the lock-up provision before the deal closes or, more likely, that the new company's board of directors alter it afterward, but this move would likely expose them to legal scrutiny because they would need to show that easing up the agreement would benefit shareholders.

TMTG first announced that it had reached a deal to go public by merging with DWAC in October 2021.

However, the agreement was held up by a two-year investigation by the Securities and Exchange Commission because special purpose acquisition companies, like DWAC, are not supposed to arrange a deal before an initial public offering. DWAC raised $300 million in its IPO in September 2021.

The SEC signed off on the deal last month after DWAC agreed to pay regulators an $18 million fine and revise its filings to comply with federal securities laws. The SEC had previously said the earlier corporate disclosures were "particularly problematic because investors focus on factors such as the SPAC's management team and potential merger targets when making financial decisions."