Social media venture under scrutiny
NEW YORK — Regulators are looking into the deal that would bring Donald Trump’s new social media company to the stock market, one that has attracted both legions of fans of the former president and people looking to make a quick profit.
The company partnering with Trump Media & Technology Group acknowledged the inquiries in a filing it made with regulators on Monday. It also gave some financial forecasts for the company, which is hoping to rival Twitter and other platforms that banned Trump. It said over the weekend that it’s lined up $1 billion in promised investments from a group of unnamed institutional investors.
The regulatory questions focus on the October announcement by Trump’s media venture that it would merge with Digital World Acquisition Corp. That company had launched on the U.S. stock market three weeks earlier with the sole purpose of finding a privately held company to buy. It’s often referred to by its trading symbol of “DWAC.”
DWAC said Monday that it is cooperating with “the preliminary, fact-finding inquiries” by the Securities and Exchange Commission and the Financial Industry Regulatory Authority.
The SEC early last month requested documents related to meetings of DWAC’s board, trading policies and communications between DWAC and Trump’s media venture.
According to DWAC, the SEC’s request said the commission’s “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.”
Under the rules, blankcheck companies, known as special-purpose acquisition companies, or SPACs, are not supposed to line up acquisition targets before selling shares.
Separately, the Financial Industry Regulatory Authority, or FINRA, asked in late October and early November for a review of trading in DWAC’s stock before the Oct. 20 merger deal was announced.
The announcement sent DWAC’s stock surging from $9.96 to $94.20 in just two days as Trump supporters and investors looking to make a fast buck piled in. The shares have since pulled back to roughly $43.
Sen. Elizabeth Warren on Nov. 17 wrote to the SEC’s chair, Gary Gensler, asking if the agency is exploring whether DWAC had violated the law by holding such discussions and misleading potential investors by failing to let them know about it before its IPO.