US regulators are scrutinizing a deal between Donald Trump’s fledgling social media company and an investment vehicle to bring the former president’s venture to the stock market, documents showed Monday.
The companies, once merged, say they plan to launch the social media platform “TRUTH Social” nationally early next year, hoping to rival services like Twitter, which banned Trump over the January US Capitol riot.
Digital World Acquisition Corp (DWAC), which is partnering with Trump, reported in a filing to US markets watchdog the Securities and Exchange Commission that it received “preliminary, fact-finding inquiries from regulatory authorities, with which it is cooperating.”
Digital World, already listed on Wall Street, announced in late October it would merge with Trump Media & Technology Group (TMTG), allowing the ex-president’s venture to be listed without the usual procedures.
In a joint statement, the two companies announced on Saturday that a group of institutional investors had committed to contributing $1 billion to the transaction.
They did not specify Monday in the regulatory document the identity of these investors.
Digital World says the SEC is seeking details of its board meetings, brokerage procedures, the identity of certain investors and dealings with Trump’s company.
The Financial Industry Regulation Authority, for its part, requested information from DWAC about its stock activity prior to the official announcement of the TMTG deal on October 20.
“The investigation does not 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,” Digital World’s filing said.
Its stock was down three percent at around 1645 GMT on Wall Street.
Digital World is a special purpose acquisition company (SPAC), sometimes called a “blank check” company because it is set up with the sole purpose of merging with another entity.
Trump says the new platform will be an alternative to Silicon Valley internet companies that he says are biased against him and other conservative voices.
The 75-year-old was thrown off Twitter — his preferred communications conduit while president — as well as Facebook and YouTube after the January 6 insurrection in which a mob of Trump supporters, riled up by his repeated false claims the November 2020 election was stolen from him, assaulted the US Capitol.
Currently available for pre-order on the App Store, it’s expected launch is set for the first quarter of 2022.