The former President Donald Trump’s return to Wall Street’s facilitator Digital World unveiled Monday that they are under investigation by two federal regulators.
Trump, talking about his new media venture late October, said that it would “stand up to the tyranny of Big Tech.” The new entity, chaired by the former president, agreed to go public through a merger with a Special Purpose Acquisition Company [SPAC] Digital World.
In filings Monday, Digital World Acquisition Corp. announced that it received a document request from the Securities and Exchange Commission [SEC] early November. Furthermore, the SEC requested communications between them and Trump Media & Technology Group for information related to potential violations of insider trading laws.
The Financial Industry Regulatory Authority [FINRA], Wall Street’s self-regulator, is looking into trading prior to the deal’s announcement, said Digital World.
Digital World investors were euphoric after the company announced the deal with Trump Media & Technology Group. Their shares skyrocketed to approximately 1,657% within mere days of the announcement and despite little information on how this deal would work out for them in advance it attained meme status as soon as it happened.
The deal sparked controversy quickly. Trump and Digital World started discussing a merger long before the public knew about the SPAC company.
US Senator Elizabeth Warren of Massachusetts has called for a SEC investigation into whether Digital World committed law violations, as the company consistently denied having pre-arranged merger targets. SPACs are not supposed to have merger targets before seeking funding from the public.
Warren said that she is “glad” of the SEC and FINRA investigation of the deal in a tweet Monday. She wrote that “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.”
According to Digital World, documents involving telephone, e-mail addresses and identities of certain investors, policies and procedures related to trading, the identification of banking, and meetings of its board of directors are inclusive to SEC’s request.
Digital World has indicated that it has given its cooperation and is stressed, following the SEC’s request and that the investigation does not necessarily 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.”
Neither Digital World nor Trump Media & Technology Group has released a statement in response to demands of further comment.