Senator Elizabeth Warren has called on the Securities and Exchange Commission (SEC) to open an investigation into the special-purpose acquisition companies deal involving Donald Trump’s social media platform.
The SPAC deal announced in October would create a social media app called TRUTH Social, which Mr Trump said would “stand up to [other] Big Tech” companies.
The move came nine months after Mr Trump was banned from several social media platforms for his alleged role in the 6 January US Capitol riots that left five people dead.
In a letter to SEC Chairman Gary Gensler, the Massachusetts senator said that Digital World Acquisition Corp (DWAC), which announced plans to merge with Trump’s company, “may have committed serious securities violations by holding private and undisclosed discussions about the merger as early as May 2021”.
“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 letter, which has been reviewed by The Independent, further read.
Warren admitted that she has been “concerned for some time about the misaligned incentives underlying SPAC deals, which are often structured to exploit retail investors to the benefit of large institutional investors such as hedge funds, venture capital insiders, and investment banks.”
The senator has questions about DWAC’s filings between 25 May 2021 and 8 September 2021 that the organisation said to “have not selected any specific business combination target and we have not, nor has anyone on our behalf, initiated any substantive discussions, directly or indirectly, with any business combination target.”
However, Warren argues that one press report indicated that “Patrick Orlando, the SPAC’s sponsor, was discussing a deal with former President Trump as early as March 2021, months prior to the SPAC’s initial filing in May 2021 and public offering in September 2021.”
Earlier this week it was revealed that Trump‘s media company — the Trump Media and Technology Group — is valued at $10bn, according to one report.
The company is reportedly going to launch Mr Trump’s social media company and while there is no stock currently associated with the business, investors are lining up to boost the endeavour.
Forbes reports that investors can, and have been, buying into a special purpose acquisition company (SPAC) that will eventually merge with Mr Trump’s business. When it was revealed that the SPAC would merge with Mr Trump’s media company, shares leapt from about $10 to $60 a share over the last month.
Trump Media and Digital World were not immediately available for comment.
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