Regulators investigating financing of Trump’s new media company

The Securities and Exchange Commission (SEC) and another financial regulatory agency are investigating the planned merger of former President Trump’s new media company with a special purpose acquisition company (SPAC).

Digital World Acquisition Corp. (DWAC), the SPAC, disclosed in a filing on Monday that it has received “certain preliminary, fact-finding inquiries from regulatory authorities, with which it is cooperating.”

Digital World said it received requests from the Financial Industry Regulatory Authority (FINRA) in late October and early November for information regarding events that took place before the public announcement in October of its merger with the Trump Media & Technology Group.

Digital World noted in its filing that the existence of the FINRA inquiry “should not be construed as an indication that FINRA has determined that any violations of Nasdaq rules or federal securities laws have occurred, nor as a reflection upon the merits of the securities involved or upon any person who effected transactions in such securities.”

Additionally, Digital World said the SEC reached out early last month with a request for information and documents related to board meetings, policies and procedures related to trading, banking and contact information, the identities of specific investors and certain communications between the company and Trump Media & Technology Group.

“According to the SEC’s request, the investigation does not mean that the SEC has concluded that anyone violated the law or that the SEC has a negative opinion of DWAC or any person, event, or security,” DWAC wrote in its filing.

Trump revealed in October that he was starting a new social media network called “Truth Social,” while also announcing that his new company, Trump Media & Technology Group, had entered a merger agreement with Digital World, which was created in December 2020.

Trading for the SPAC increased following Trump’s announcement, at one point skyrocketing 130 percent.

The disclosure of the inquiries comes nearly three weeks after Sen. Elizabeth Warren (D-Mass.) penned a letter to SEC Chairman Gary Gensler requesting that the agency open an investigation into the deal between Digital World and Trump Media & Technology Group.

Warren suggested that the deal had violated the Securities Act of 1933 because Patrick Orlando, the sponsor of Digital World, allegedly had conversations about an agreement with Trump as early as March 2021, well before the SPAC made its first filing in May 2021 and launched its initial public offering (IPO) in September 2021.

According to the 1933 statute, SPACs must disclose any form of direct or indirect contact with potential target companies to protect investigators who get involved at the time of the IPO, Warren wrote in her letter.

“The reports about DWAC and Trump Media and Technology Group appear to be a textbook example of a SPAC misleading shareholders and the public about materially important information,” the senator wrote.

Based on the timeline laid out in SWAC’s Monday filing, however, the investigations were opened before Warren sent her letter to Gensler.

The Hill reached out to Trump for comment.