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The SEC is looking into a deal involving a social media company.
The photo was taken by Al Drago.
Two US regulatory agencies are investigating the special purpose acquisition company that plans to take former President Trump's social media company public. The SEC and the Financial Industry Regulatory Authority have inquired about the company.
The SEC is interested in documents related to communications between the SPAC and Trump's social media venture, including "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
The October 20th announcement that DWAC was merging with TMTG has led to a review of trading that happened prior to that. The inquiries occurred in late October and early November.
The fate of Trump's media company is in jeopardy if either agency finds evidence of improper financial dealings in the SPAC's inception. SPAC shareholders can withdraw their investment at any time. In recent months, investors have become less excited about the deals. The Wall Street Journal reported last week that the average SPAC deal has lost more than half its money before it closes.
The deal would give Trump's company nearly $300 million to get Truth Social, which is essentially a clone of a social networking site. The company would be public with a listing on the exchange. The news release said that it had agreements with a diverse group of institutional investors to raise about $1 billion as part of a concurrent private funding round. DWAC projects that Truth Social will have 40 million subscribers and 81 million users by the year 2026.
The SEC has a negative opinion of DWAC or any person, event, or security, but 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. It said that the inquiry should not be seen as an indication that the company has determined that there have been violations of the rules.
The initial investor presentation said that Trump planned to build a media powerhouse to fight back against the Big Tech companies of Silicon Valley who have used their power to silence opposing voices in America. The former president was banned from social platforms in January after his supporters carried out an insurrection in the US Capitol.
In a November letter to SEC chair Gary Gensler, Sen. Elizabeth Warren asked the SEC to investigate the Trump SPAC deal, saying that DWAC and TMTG had "brazenly violated" securities rules. The New York Times reported on October 29th that DWAC head Patrick Orlando had been in talks with Trump for at least March. SPACs are required to disclose any conversations with potential target companies.
