The Wall Street Journal reports:
The publicly traded company that plans to merge with former president Donald Trump’s social media company is under investigation by two federal regulators, which have asked for stock trading information and communications.
Digital World Acquisition Corp. disclosed in a Securities and Exchange Commission filing that it had received “certain preliminary, fact-finding inquiries” from the Financial Industry Regulatory Authority in late October and early November regarding stock trading tied to the merger agreement announced Oct. 20.
Separately, the SEC asked for information related to meetings of the company’s board of directors, information on investors, and communications, according to the filing.
SPACs, which have seen a boom as alternatives to traditional IPOs, have come under growing scrutiny by regulators and lawmakers because of concerns that investors may not have enough information to understand the risks involved.
Sen. Elizabeth Warren (D-Mass.) last month asked the SEC to look into the Trump SPAC merger. Warren said in a letter to SEC Chair Gary Gensler that Digital World may have violated securities rules by failing to disclose discussions it was reportedly having about merging with Trump Media & Technology Group.
Warren cited a New York Times story that said the SPAC’s CEO was discussing the deal with Trump well before the company started trading on the Nasdaq in October.
Nobody is above the law—and there may have been serious violations of securities laws during the proposed merger of Digital World Acquisition Corp & Trump’s media company. I’m glad @SECGov and @FINRA are investigating.https://t.co/0lAhtFTdji
— Elizabeth Warren (@SenWarren) December 6, 2021
— David Enrich (@davidenrich) December 6, 2021
— Adam Weinstein (@AdamWeinstein) December 6, 2021
Trump’s legal troubles are only growing: the SEC and other regulators are reportedly investigating the financing for his new media company.https://t.co/lBabOFpF2e
— Citizens for Ethics (@CREWcrew) December 6, 2021