Topline

Dominari Holdings insiders, as well as Donald Trump Jr. and Eric Trump, acquired 1 million shares through a private placement and bonuses just before the stock surged on news of the Trumps joining its advisory board, filings show—timing that experts say likely does not violate insider trading laws but raises questions about whether directors acted in the company’s best interests by selling the shares cheaply to themselves.

Key Facts

Is This Insider Trading?

Probably not. “As a general rule, if a company sells stock directly to someone (private placement), where the buyer knows all material facts regarding the company, there is no insider trading violation or other securities fraud,” Allan Horwich, a law professor at Northwestern University with more than four decades of experience in securities litigation, told Forbes. “If there is no open market trading, e.g., where someone not aware of the information might have been harmed because he traded without that information, then there is no insider trading violation or other securities fraud.”

What To Watch For

“Irrespective of the securities laws, if a company sells stock too cheaply there could be a breach of a fiduciary duty to the selling company by the directors who approved the sale,” Horwich said. “In that event, where the company arguably was damaged, the company is not going to sue its own misbehaving directors. For any relief, a stockholder would have to seek to pursue a derivative claim on behalf of the company against directors for breaching a duty which damaged the company—selling stock too cheaply.” Dominari Holdings’ small market cap, though, may make it an unattractive target for plaintiffs’ attorneys.

Also, future SEC filings could shed light on the Trumps’ holdings and reveal if any insiders took advantage of the Trump bump to sell their shares. So far, none have reported doing so, though they may be temporarily restricted from selling. “There are various regulations that would prevent the directors from re-selling the private placement stock for at least six months,” said James Park, a law professor at UCLA who focuses on securities regulations. “It’s also possible that under the sale they committed to holding the shares longer than six months. That would reduce but not eliminate the risk of unjust enrichment because they cannot flip the shares immediately to take advantage of the market reaction to the announcement.”

Crucial Quote

“The announcement [of the Trump’s involvement with the company] right after [the private placement] is unusual. The insiders providing financing is not unusual at all,” said Adam Pritchard, a professor at the University of Michigan who specializes in corporate and securities law. “Private placements are faster and cheaper. And so most money is raised through private placements, not public offerings. And you’ve got a limited pool of people who are willing to invest in private placements, and the insiders are very commonly going to be part of that. Now, the optics of having this disclosure simultaneously with announcing the private placement, that’s unusual.”

What We Don’t Know

The Trumps’ SEC filings don’t disclose when they started acquiring shares in the company, how they obtained all of their shares (whether through purchases on the public markets, private placements or awards for joining the advisory board) or the price they paid. The brothers did purchase at least some of the shares in a private sale though, according to a company press release.

It seems likely that Donald Trump Jr. and Eric Trump received shares in conjunction with their roles on the advisory board. According to the template for an advisory board agreement that Dominari Holdings filed with the SEC on Feb. 12, members are compensated with an unspecified number of shares upon joining the board, as well as additional shares if the company’s market capitalization reaches $50 million, $100 million and $150 million. Given that the company’s market cap surpassed $50 million and $100 million in February following the Trump announcement, the brothers likely received additional shares at that time.

SUrprising Fact

There’s little public record of Dominari Holdings’ advisory board before the announcement that Trumps had joined it.

Tangent

Trading volume for Dominari Holding soared ahead of the February announcement that the Trumps had taken stakes in the company and joined its advisory board—an increase that some securities law experts called “suspicious.”

Big Number

$747,000: What Dominari Holdings appears to pay the Trump Organization in annual rent for its headquarters in Trump Tower, reported independent journalist Wendy Siegelman, citing SEC filings.

Forbes Valuation

In November 2024, Forbes estimated Donald Trump Jr.’s net worth at $50 million, while valuing Eric Trump at approximately $40 million.

Further Viewing

Further Reading

Trump’s Sons Invest In AI Data Centers After He Touts Billions In Industry Expansion (Forbes)

Trump Media Paid Donald Trump Jr. Nearly A Quarter Of Its Annual Revenue. He Attended Just Two Board Meetings (Forbes)

Donald Trump Jr. And Eric Trump Deny Involvement With Fraudulent Statements In Testimony—Though Evidence Suggests Otherwise (Forbes)

How Donald Trump Shifted Kids-Cancer Charity Money Into His Business (Forbes)

After Promising Not To Talk Business With Father, Eric Trump Says He’ll Give Him Financial Reports (Forbes)