SPAC merging with Trump’s media firm gets SEC information request

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Digital World Acquisition Corp has drawn criticism since its plan to merge with Trump’s nascent media company was announced.

By Sophie AlexanderBloomberg

Published On 6 Dec 2021

Digital World Acquisition Corp., the blank-check company merging with former President Donald Trump’s nascent media firm, disclosed that it has received information requests from U.S. regulators.

The Securities and Exchange Commission in early November sought records tied to meetings involving Digital World’s board of directors, its policies and procedures related to trading and the identities of certain investors, the company said in a Monday regulatory filing.

Digital World said the information requests do not mean the regulators have determined any rules have been violated. Its shares slumped 5% to $42.71 at 10:11 a.m. in New York.

Trump first announced the plan to merge Trump Media & Technology Group with a special purpose acquisition company, or SPAC, in October. The move could help him regain a social media presence after he was kicked off Twitter Inc. and Facebook Inc. platforms in the wake of the Jan. 6 insurrection at the U.S. Capitol.

The new enterprise has said it will be in operation by the first quarter of 2022 and plans to start a social media company called Truth Social, though few financial details have been disclosed.

On Saturday, the firms said they had commitments for $1 billion from so-called PIPE investors, or private investment in public equity, without naming the participants.

“As our balance sheet expands, TMTG will be in a stronger position to fight back against the tyranny of Big Tech,” Trump said in the statement.

The SPAC has drawn criticism since its first announcement. Senator Elizabeth Warren has called on the SEC to investigate it over reports that it may have skirted securities rules. The Massachusetts Democrat said she’s concerned that Digital World’s chief executive officer, Patrick Orlando, may have held talks with Trump months ago – discussions that weren’t disclosed to potential investors.

“DWAC’s failure to disclose these talks during the process appears to be an omission of material information necessary for both early institutional investors and retail investors in the SPAC’s public offering,” she said in a letter to SEC Chair Gary Gensler in November.

(Updates with Warren request in seventh paragraph.)

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