Trump social-media SPAC deal being investigated by SEC

By | December 7, 2021

The Wall Street Journal reports:

Regulators are investigating a deal between Donald Trump’s new social-media venture and a special-purpose acquisition company that would take the former president’s company public, according to a Monday securities filing.

The Securities and Exchange Commission is probing a potential merger between Trump Media & Technology Group and the SPAC Digital World Acquisition Corp., Digital World disclosed Monday. The SPAC is known by its stock ticker, DWAC.

The SPAC said in October that it is taking Mr. Trump’s social-media company public in a deal that valued it at roughly $875 million, including debt.

After the deal was announced, The Wall Street Journal and other media outlets reported that Mr. Trump met with Digital World Chief Executive Patrick Orlando early this year and before the SPAC had raised money. If the meeting is deemed to have represented substantive deal talks, it could violate SEC rules. That is because SPACs aren’t supposed to have a target company identified at the time they initially raise money, analysts say.

The SEC sought information from Digital World in November about its trading policies and communications between the SPAC and Mr. Trump’s company, according to the filing. The SEC also asked for banking records and the identities of some investors, the filing said. It couldn’t be determined whether the SEC is specifically seeking information regarding Mr. Orlando’s meeting with Mr. Trump.

SEC investigations typically focus on whether public companies made accurate disclosures to investors and take months or years to complete. Its civil probes don’t necessarily result in formal allegations of wrongdoing. [Continue reading…]

Timothy L. O’Brien notes:

Trump is a former occupant of the Oval Office and is likely to make another presidential bid in 2024. He had his hands on the national security apparatus once before and may well again. The identities of the investors who just tossed $1 billion his way are of interest because anyone able to buy their way into Trump’s good graces by plopping a bag of money on his desk could sway public policy — which makes Trump a national security threat.

What might it mean, for example, if countries such as Saudi Arabia or others in the Middle East have decided to invest in his venture? That’s not an entirely hypothetical question.

Former Treasury Secretary Steven Mnuchin recently launched an investment firm, Liberty Strategic Capital, with funding from the Saudi government and other countries in the Persian Gulf region. Mnuchin closely courted those same countries when he was one of the most powerful U.S. financial regulators in the Trump administration, but avoiding financial conflicts of interest was never a priority for Mnuchin, Trump and many others on that team. [Continue reading…]

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