The Senate Banking, Housing and Urban Affairs Committee is holding a hearing.
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The SEC has been asked to investigate Donald Trump's Digital World SPAC.
Warren wrote to the SEC that the SPAC may have committed securities violations.
Digital World Acquisition soared as much as 1,650% last month when it was announced that they were merging with Trump's media company.
Senator Elizabeth Warren is asking the SEC to investigate whether Digital World Acquisition committed securities violations when the SPAC announced plans to merge with Donald Trump's media company.
Digital World soared as much as 1,650% in just two days after it announced plans to merge with Trump Media and Technology Group. The former president's media company is working on a social media platform that could one day compete with giants like Facebook and Alphabet, according to its investor presentation.
Digital World held private and undisclosed discussions about merging with Trump Media as early as May 2021. Warren argued that the SPAC didn't start trading until September and that it didn't give any indication that it was going to merge with the Trump company.
Warren wrote a letter to the SEC chairman asking for an investigation into Digital World Acquisition's acquisition of Trump Media and Technology Group.
Warren told Gensler that she was concerned that SPACs were often structured to exploit retail investors to the benefit of large institutional investors.
Digital World's failure to disclose talks with Trump and his company had the result of enriching big investors while trapping retail investors in a stock bubble.
The SPAC hit a high of $175 on October 22, but has fallen to around $56 as of Thursday afternoon. One investor bought Digital World stock on the day it peaked, and that investor is a congresswoman named Marjorie Taylor Greene.
Early investors in the SPAC like Lighthouse Investment Partners and Saba Capital saw their paper profits go up after the deal was announced.
Warren pointed to reports that early versions of Trump Media's social media platform are half-baked, and that the company doesn't have a core business model as it says it will compete with the likes of trillion dollar companies.
The agency has a responsibility to act if the reports are true.
Business Insider has an original article.
