The special purpose acquisition company, or SPAC, that announced plans to merge with former President Donald Trump’s new social media company is under investigation by federal regulators, the company disclosed on Monday.
The SPAC, Digital World Acquisition Corp., disclosed the investigation in a filing with the Securities and Exchange Commission.
“DWAC has received certain preliminary, fact-finding inquiries from regulatory authorities, with which it is cooperating,” the company said.
It added that in late October and early November, the Financial Industry Regulatory Authority requested information “surrounding events (specifically, a review of trading) that preceded the public announcement of” the SPAC’s merger with Trump’s company, Trump Media & Technology Group.
In the days following the Oct. 20 announcement of the merger, DWAC’s stock soared as much as 1,100 percent. The stock has lost much of those gains, but is still up almost 400 percent since the announcement of the merger with Trump’s company.
DWAC was last seen trading about 4 percent lower on the day at just over $43 per share.
A SPAC is a blank-check company that’s formed and goes public to raise money from investors to fund an acquisition of a private company, which will then take its place on the markets.
“According to FINRA’s request, the 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,” DWAC said in the Monday filing.
The SEC has also requested documents from DWAC, the disclosure said.
“Additionally, in early November 2021, DWAC received a voluntary information and document request from the SEC which sought, inter alia, documents relating to meetings of DWAC’s Board of Directors, policies and procedures relating to trading, the identification of banking, telephone, and email addresses, the identities of certain investors, and certain documents and communications between DWAC and TMTG,” the filing said.
“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.”
A representative for Trump’s new company did not immediately return The Post’s request for comment on the new disclosures.
The disclosure of the investigations comes two days after Trump’s company and DWAC said the SPAC had entered into subscription agreements for $1 billion in committed capital from a “diverse group of institutional investors” that will close when the merger is complete. The announcement did not name the investors behind the deal.
Less than a month ago, Sen. Elizabeth Warren (D-Mass.) called for the SEC to investigate the deal for possible SEC violations.
Trump’s new company, TMTG, said in October that it plans to roll out a new social network, dubbed TRUTH Social, and is targeting a nationwide launch in the first three months of 2022.
Its mission is to “create a rival to the liberal media consortium and fight back against the ‘Big Tech’ companies of Silicon Valley, which have used their unilateral power to silence opposing voices in America,” it previously said.
The company, though, has not yet named any management officers or employees other than Trump, who’s listed as chairman.
Patrick Orlando, the CEO of DWAC, is a former employee of investment banks, including Deutsche Bank, where he specialized in emerging markets fixed-income derivatives.
He is currently associated with at least three other SPACs: Yunhong International, Benessere Capital Acquisition, and Maquia Capital Acquisition. None of them have successfully gone public.
Scroll down to leave a comment and share your thoughts.
