“I HAVE NO INTENTION OF SELLING!” Donald Trump posted on Nov. 8 on Truth Social, three days after he swept all seven swing states on his way to a popular vote victory and a second term in the White House.
All he’d need to do is secure a certificate of divestiture, a routine document for incoming executive branch officials.
The consequences of Trump holding onto his stock could be serious—and stretch beyond just his own finances.
“Once he’s inaugurated, does Truth Social become essentially state-sponsored social media?
Editor’s note: In November 2023, Trump Media sued 20 media outlets, including Forbes, for reporting that included calculations of its financial results while still a private company.
Donald Trump wrote on Nov., “I HAVE NO IDEA OF SELLING!”. three days after he won a second term in the White House and a popular vote victory by sweeping all seven swing states, eight on Truth Social. “Truth is an important part of our historic win, and I deeply believe in it,” he said, urging inquiries into “fake, untrue, and probably illegal” rumors that he might sell some or all of his 114,750,000 shares of Trump Media and Technology Group, the company that owns Truth Social. The platform reported losing about $19 million last quarter. “.”.
Trump’s refusal to sell off his companies during his first term is consistent with that strategy, so it is not surprising. But considering that there is a clear way for him to sell his shares, he could avoid a huge capital gains tax bill, diversify his wealth away from one erratic stock, and allay ethical concerns—all of which could save him hundreds of millions of dollars. That could be a big mistake. Obtaining a certificate of divestiture, a standard document for newly appointed executive branch officials, would be all that would be required of him.
In order to comply with conflict-of-interest laws, presidential appointees who leave the private sector frequently have stock holdings or other assets that they must sell. If an official receives a certificate of divestiture (or CD) from the federal Office of Government Ethics and uses the proceeds of the sale to purchase a permitted asset, such as treasury bonds or diversified mutual funds, they can postpone paying any capital gains taxes on the transaction until they sell the replacement property.
“It was considered a deterrent in the past to force them to divest and then incur capital gains, and the idea was that you could never get anybody to come into the government,” says Virginia Canter, who became chief ethics counsel at Citizens for Responsibility and Ethics in Washington, a watchdog group, after working as an ethics lawyer or advisor in several government agencies.
According to Canter, “the primary benefit to the government is that you’re resolving conflicts of interest.” This means that a CD can benefit all parties. One could argue that the beneficiary would benefit from being able to diversify their holdings. The appointment of Goldman Sachs CEO Hank Paulson to lead the Treasury by George W. Bush in 2006, with the assistance of Richard Painter, the White House’s chief ethics lawyer at the time, to ensure that Paulson sold off approximately $600 million worth of Goldman Sachs stock. “After leaving Goldman Sachs in 2006, it’s fantastic for Hank Paulson,” Painter remarked. And when the market crashed in 2008, I believe he ought to have given me a call and expressed gratitude. ”.
Additionally, Trump may benefit greatly from diversification. Since September, the price of his Trump Media shares has been wildly fluctuating. 1. In September, they fell as low as $12 to $15. 23) and a peak valuation of $51.51 (on Oct. 29), featuring numerous peaks and valleys. This implies that his net worth, which is currently more reliant on this platform than his long-standing real estate and resort business, likewise fluctuates greatly; it doubled from $4 billion to $8 billion in October and is currently $5.33 billion.
Deferring the capital gains could be a significant windfall, even if switching a volatile investment to an index fund isn’t all that alluring. Trump would probably have to pay about $770 million in taxes on the $3.02 billion in proceeds if he sold all of his shares at Friday’s closing price of $28.10 per share. Both numbers would be lower overall because, in practice, the stock price would probably drop if his massive number of shares suddenly hit the market. He could put that $770 million back into a diversified portfolio and worry about taxes later if he had a certificate of divestiture.
If he is able to obtain one. Although presidents have historically complied with the spirit of the conflict of interest statute by establishing blind trusts or selling off conflicting holdings, including Donald Trump during his first term, the statute does not legally bind the president or vice president. In 2020, Walter Shaub, who was in charge of OGE when Trump first took office, told Forbes that he would have provided one if Trump had requested it and that he anticipated the IRS, which examines a CD when the recipient files taxes, would have complied. For this article, Shuab could not be reached for comment. In contrast, Shaub’s predecessor, Don Fox, who oversaw the agency from 2011 to 2013, says he would have had to submit to Congress if the issue of a presidential CD had been raised during his tenure. “Just because you want one, you can’t get one,” he says.
According to Canter, OGE could ask Congress for clarification if it decides it lacks the authority, but it might also use an executive order signed by Biden or Trump. The president “should” be able to receive a CD, according to Painter, who acknowledged that there might be some ambiguity. “If not,” he continues, “they should immediately change the Office of Government Ethics rules to ensure that a president can receive a certificate and benefit in the same ways as everyone else.”. OGE’s spokesperson chose not to comment.
Retaining Trump’s stock could have dire repercussions that go beyond his personal finances. Canter, Fox, and Painter all voiced concerns about a variety of topics, including the potential for foreign governments and domestic special interests to purchase advertisements on Truth Social and put money directly into Trump’s coffers, as well as the fact that Trump would select the leaders of the organizations that oversee the platform. “This is unprecedented in the United States,” Fox claims. “Once he’s inaugurated, does Truth Social become essentially state-sponsored social media? How do you read a post by the sitting president of the United States on a social media platform that he owns?” Trump’s recently launched cryptocurrency company raises similar issues, as does his real estate empire that led to lawsuits and perpetual disputes over conflicts of interest during his first term.
At a January Fox News town hall, the president-elect minimized any possible conflicts, seemingly unconcerned. “It’s a little money if I have a hotel and someone comes in from China,” he stated. “”.
With more coverage by Dan Alexander.
Editor’s note: Trump Media filed a lawsuit against 20 media organizations, including Forbes, in November 2023 for publishing data that included the company’s financial results when it was still a privately held business. A move to dismiss the claims has been made by the defendants.
