A Delaware judge has ruled that Trump Media & Technology Group (TMTG), the company behind Truth Social, breached an agreement with ARC Global and must give it more than half a million additional shares.
ARC Global, led by Patrick Orlando, was an early investor in Digital World Acquisition Corp. (DWAC), a special-purpose acquisition company that later merged with TMTG, making the company public.
Former President Donald Trump owns about 57 percent of TMTG, commonly known as Trump Media.
In her ruling, Will found that ARC Global is entitled to receive 8.19 million shares of TMTG, more than the 7.04 million shares previously allocated to it, noting that ARC had “prevailed on aspects of its breach of contract claim.”
The case revolved around a contract dispute related to DWAC’s certificate of incorporation. The certificate set the rules for how Class B shares would convert into Class A shares upon a business combination.
Orlando, who initially served as DWAC’s CEO, was involved in negotiating the merger with TMTG but was ousted from his role before the transaction was finalized. In its lawsuit against the Trump-controlled company, ARC Global said that TMTG’s board deliberately set a share conversion ratio that was unfavorable to it, reducing ARC’s expected stake.
Trump Media had accused Orlando of mismanagement and raised concerns about his handling of the deal. By contrast, ARC Global had argued that personal animus toward Orlando led to the shortfall in shares, a claim Will partly supported by correcting the stock allocation.
However, the judge awarded ARC Global far fewer shares than the 10 million it had originally sought, rejecting ARC’s allegations of breach of fiduciary duty against TMTG’s board. The judge concluded that the board’s actions were not driven by bad faith, while criticizing both parties for complicating what should have been a simple process.
“What should have been a straightforward exercise in contract interpretation and math was obscured by the parties’ injection of other issues,” Will wrote in the opinion. “ARC claims that the members of DWAC’s board of directors calculated the conversion ratio and made related disclosures in bad faith out of personal animus for ARC’s founder Patrick Orlando.”
“In response, the defendants raise a series of affirmative defenses concerning unrelated and purported misconduct by Orlando,” she continued. “I reject these diversions as meritless, irrelevant, or untimely.”
The judge noted that, in light of the evidence, she was entering a judgment partly in favor of ARC and partly in favor of Trump Media. After dismissing ARC’s breach of fiduciary duty claims, she determined that the proper conversion ratio should be a value roughly in the middle of what the DWAC had calculated after Orlando’s ouster and what ARC was demanding.
“I agree with ARC on some inputs, with the defendants on others, and set the conversion ratio at 1.4911:1,” Will wrote.
The contract prevents ARC and Trump Media from selling their stock until the lock-up period expires on Sept. 19, according to Will’s opinion.
An implementing order that was filed at the same time as Will’s memorandum opinion requires the parties to “immediately” work to release the additional shares to ARC so that it can freely sell or transfer them after the contractual lock-up period expires in a matter of days.
Neither ARC Global nor Trump Media responded to a request for comment on the ruling.
Trump told reporters last week that he does not plan to sell his shares in TMTG, a stake that’s now worth around $1.84 billion.
Trump Media, which currently has a market cap of around $3.23 billion, saw its value balloon to nearly $10 billion following its Wall Street debut.
