Invest1 publisher3 min readPublished
53 former prosecutors tell a court buyers of Trump's $100,000-a-month post feed may be criminally liable
Fifty-three former federal prosecutors told a federal court that firms paying up to $100,000 a month for early Truth Social posts may face criminal liability. No one has been charged, but each subscriber's $1.2 million-a-year seat is now a compliance question.
The Investor · Invest desk
What happened
- Fifty-three former federal prosecutors and law enforcement agents filed an amicus brief on Monday in the Southern District of New York backing an injunction sought by The Intercept and the Freedom of the Press Foundation.
- Trump Media's Truth API is pitched to financial institutions and trading firms as a way to receive posts from prominent Truth Social accounts before they are broadly available.
- Fortune cites reports estimating that nearly a dozen firms have signed up for the service at $100,000 a month.
- The brief says the service may breach the Securities Exchange Act, the Trade Secrets Act and laws on illegal gratuities, conflicts of interest and illicit compensation for federal employment.
- The signatories have not filed a lawsuit of their own and do not claim that any crime has been proven.
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Why it matters
- decision Each subscriber's compliance team now has to weigh a $1.2 million-a-year feed of pre-release posts against a court filing that calls buying it a possible crime.
- exposure Firms that have already paid stay exposed even if the feed is shut, because the liability theory O'Donnell described also covers trades made on posts already received.
- constraint The judge can grant or deny the injunction on the government-interest test alone, so subscribers may come away with no ruling on their own legal position.
- cost An injunction would halt Truth API revenue that tops out near $14.4 million a year at the reported subscriber count, money the brief says benefits Trump through his stake.
A seat on Truth API at $100,000 a month costs a trading firm $1.2 million a year [1]. Fortune cites an estimate of nearly a dozen subscribers. If that is right, Trump Media & Technology Group is booking something under $1.2 million a month from the product, or under $14.4 million a year [5][2]. Those are ceilings. The brief describes a scheme to charge "up to $100,000 per month" [7], so some buyers may pay less. The brief also argues that Trump profits personally from the arrangement because he is a major beneficiary of the company [16]. Trump Media did not immediately respond to Fortune [15].
A firm pays $1.2 million for a head start only if it expects the head start to make it more than $1.2 million [1]. That head start is what the filing attacks. It says there is "no legitimate, let alone significant, government interest in allowing public officials to profit personally by selling early access to official government announcements" [6]. It also invokes the Securities Exchange Act, under which violators may be liable for "unlawful insider tips" [8]. Gian Luca Clementi, an economics professor at NYU Stern, had earlier told Fortune bluntly that he considers this insider trading by definition [14]. The report does not name the subscribers or say how far ahead of the public a post arrives [4].
The argument about subscribers came from Renata O'Donnell, senior legal counsel at the Campaign Legal Center, which worked on the filing with Singleton Schreiber [10]. "There is potential criminal liability for folks who have paid the $100,000," she said, and it would "extend to folks who have already paid the $100,000, and for future folks who might" [10]. Her case for moving fast is to stop the service "before more folks sign on" [10]. An injunction would cap the number of subscribers. It would not cover trades a firm has already made on posts it received early.
The court can decide the injunction without deciding anyone's guilt. The brief uses criminal exposure as its reason there is "no legitimate or significant government interest that justifies the scheme" [13]. A grant would stop the feed and leave the question of past trades open. A denial would keep the feed running, with a brief from 53 former prosecutors and law enforcement agents on the docket arguing that its buyers may be breaking the law [1].
I think the risk to subscribers is real but will take time to arrive. The signatories have more than 880 years of government service between them across 11 administrations, about 16.6 years each [3][3]. They are also former officials. The group has not sued and does not claim that a crime has been proven [12]. The counter-case is that a post every Truth Social user eventually sees is weak material for an insider-trading theory, and a judge could say so. A ruling that rejects the government-interest argument on its merits would count against my view. So would a year of $100,000 monthly invoices with no inquiry from the SEC or the Justice Department.
What to watch
- The Southern District of New York's ruling on the injunction, and whether it addresses the criminal-liability arguments or only the government-interest test.
- Any response from Trump Media, including changes to Truth API pricing or to which official accounts the feed covers.
- Whether the SEC or the Justice Department takes any step on Truth API subscribers. The brief's signatories are former officials with no power to bring charges.