Donald Trump Controls a Publicly Traded Company. Now He Will Pick Its Regulator.

Last month a major shareholder of a publicly traded company took to social media to complain that people — perhaps short sellers — were spreading lies that could hurt his firm’s stock price.

“There are fake, untrue, and probably illegal rumors,” the post read. “I hereby request that the people who have set off these fake rumors or statements, and who may have done so in the past, be immediately investigated by the appropriate authorities.”

The Securities and Exchange Commission doesn’t typically take its marching orders from shareholders on social media. But in this case, the poster was Donald Trump, who’s just weeks away from being inaugurated and gaining the power to appoint the head of the SEC.

When Trump takes office in January, a president will for the first time be the majority owner of a publicly traded company, Trump Media, which runs Truth Social. Former SEC officials are concerned about how Trump could try to use the agency to go after the foes of his company, which accounts for more than half his fortune. They also worry that the agency isn’t up for the job of taking on Trump Media should it run afoul of securities laws.

Cases involving public companies with aggressive lawyers are difficult “even if you don’t have conflicts of interest and concerns about pissing someone important off,” a current employee in the SEC’s enforcement division said. “I don’t think anyone would explicitly say, ‘Don’t do it,’ but they’d just be like, ‘I could do another case.’”

In Trump Media’s short history, it has had a combative relationship with the SEC, though it has never been charged with wrongdoing by the agency.

In 2022 as Trump Media was seeking to go public, which it did through a merger with an already traded company, it threatened to sue the SEC because of what it called “inexcusable obstruction” and “obvious conflicts of interest among SEC officials and clear indications of political bias.” CEO Devin Nunes posted on the platform, “NO MORE BS!” The company never sued.

The following year, the company that took Trump Media public settled fraud charges with the SEC for $18 million after the agency found it made misrepresentations in its filings. The SEC also brought insider trading charges against several people who invested in the deal.

Other, previously unreported issues have raised alarms inside the company that Trump Media could be violating securities laws by misleading investors, according to a person with knowledge of the company.

The company has long reported in its disclosure filings that it does not track basic performance numbers for Truth Social.

In its securities filings, the company says it “does not currently, and may never, collect, monitor or report certain key operating metrics used by companies in similar industries,” such as the number of active users and ad views. It has always been a puzzling claim — akin to a TV network choosing not to track ratings. Other publicly traded social media companies do track and report such fundamental measures of success for their platforms.

But according to interviews and records reviewed by ProPublica, the company does track the numbers, and the active user count is a tiny fraction of its competitors’. ProPublica reviewed images of an internal Truth Social employee dashboard from 2022 showing the company monitored the number of active users. Internal communications from this year show the practice continued.

The SEC investigates those types of discrepancies, experts said. Securities laws prohibit companies from knowingly misleading investors about information deemed to be significant to the company’s share price.

In a statement, Trump Media accused ProPublica of “willfully misrepresenting TMTG’s public filings and the content of stolen information” and relying on “unreliable individuals with known axes to grind.” The statement also alleged ProPublica was “conspiring with others to engage in market manipulations and fraud, and we will bring evidence of this malfeasance to the relevant local, state, and federal officials.” The company did not respond to a request to explain what was “misrepresented.”

While current and former SEC officials doubt the SEC will aggressively regulate Trump Media, the company is relatively small. The agency’s oversight of companies owned by Trump associates will also be fraught and could have broader market implications. Elon Musk’s Tesla, for example, is more than one hundred times the size of Trump Media. Musk has for years fought bitterly with the SEC. He settled a securities fraud case with the agency and later declared that, “Something is broken with SEC oversight.” After Musk became one of Trump’s most important financial backers, Trump appointed him to lead a commission to target government spending it deems wasteful.

Securities experts warned that if the SEC fails to aggressively regulate companies connected to the president or his allies, it could have disastrous consequences.

“If political power buys the power to defraud, that’s a problem, not just for our politics but for our markets. American companies have an easier time getting capital because there is faith in the way the American capital markets are regulated,” said Howard Fischer, an SEC trial lawyer during Trump’s first term.

Created after the stock market crash of 1929, the SEC is part of the executive branch but operates independently of the White House. Presidents appoint the agency’s chair, who leads a five-member commission that includes members of both parties. The agency’s nearly 5,000 employees report to that commission as they do the work of regulating the securities industry.

“How much impact is the president supposed to have on the SEC’s day-to-day operations? The answer is none,” said Allison Herren Lee, a former Democratic SEC commissioner appointed during the first Trump administration.

The line between the SEC and the president on enforcement actions has been crossed before. President Richard Nixon’s aides pressured the SEC’s general counsel, G. Bradford Cook, to remove a reference to a financier’s illegal contribution to the Nixon campaign from an SEC complaint against the executive. Nixon then installed Cook as the SEC’s chair. But after the meetings with Nixon’s aides were revealed, Cook resigned as chair, saying “the effectiveness of the agency might be impaired” because of the perception of undue influence.

If Trump tries to make enforcement demands of the SEC, as he did in his Truth Social post calling for an investigation of short sellers, SEC officials would face a choice: either ignore the president and risk his wrath, or follow his orders and undermine their independence. Former SEC officials interviewed by ProPublica predicted a middle path, in which the agency would not seriously investigate baseless claims against the company’s foes but would claim it was doing so to satisfy him.

The co-director of the SEC’s enforcement division during Trump’s first term told ProPublica he knew of no instances of Trump getting involved in enforcement decisions during his first term.

“We didn’t have issues of political interference,” said Steven Peikin, who is now in private practice. “We investigated some significant political figures.”

The Trump-era SEC investigated former Rep. Chris Collins, a Republican Trump ally from New York, who pleaded guilty to insider trading. Trump later pardoned him. The agency also investigated former Republican North Carolina Sen. Richard Burr for insider trading after the coronavirus stock market crash. (Burr said the case was ultimately dropped.)

Still, during his first term, Trump did not shy away from asking the SEC to consider specific regulatory changes. In 2018, for example, he tweeted that after speaking with “some of the world’s top business leaders,” he had asked the agency to consider allowing companies to stop filing quarterly reports and move to twice-a-year reporting.

“This was highly unusual,” Lee, the former SEC commissioner, told ProPublica.

Trump’s SEC chair at the time, Jay Clayton, said the agency was looking into “the frequency of reporting,” before rejecting the idea months later.

Though Clayton was generally popular among the SEC’s staff, his chumminess with Trump, including multiple rounds of golf together, did raise concerns about his independence.

In 2020, Clayton was asked during a House hearing if he ever discussed SEC matters with Trump during their golf outings. “There are no conversations that I’ve had that make me in any way — in any way — uncomfortable with my independence,” he testified.

While the SEC investigates possible civil violations of securities law, it is up to the FBI and Department of Justice to pursue criminal cases. Trump’s selections to lead both those agencies in his second term have ties to his social media company: Kash Patel, the FBI pick, is on the Trump Media board. Pam Bondi, selected to be attorney general, was identified in an April filing as owning a stake in the company worth more than $4 million at current prices. It’s not clear if she still owns the shares. (Bondi did not respond to a request seeking comment.)

If federal authorities shy away from scrutinizing Trump Media, securities experts said the void could be filled by state authorities, who Trump has no authority over.

“I wouldn’t be surprised if we saw blue state securities regulators opening investigations,” said Andrew Jennings, a law professor who teaches securities regulation at Emory University.

New York’s attorney general has already entered the fray. Letitia James’ office is examining an emergency loan provided to Trump Media before it went public from a trust connected to a bank in the Caribbean, according to records and a source with knowledge of the probe.

Last month, the Financial Times reported that Trump Media is in talks to buy a crypto trading venue called Bakkt. If that deal is consummated, it would be Trump’s second crypto venture following the September launch of a Trump-affiliated token by a company called World Liberty Financial.

Trump’s crypto investments create yet another area of potential conflict of interest with the SEC, whose current Democratic chair, Gary Gensler, led an enforcement campaign against the crypto market, which he described as rife with fraud and scams.

On Wednesday, Trump announced his nominee to chair the SEC: Paul Atkins, a Bush-era SEC commissioner who has spent the last seven years as co-chair of a crypto advocacy group.

Deregulating crypto was a theme of Trump’s campaign, with Trump telling a crypto conference over the summer: “The rules will be written by people who love your industry, not hate your industry.”