Top financial regulators on Wall Street are investigating Donald Trump’s $1.25 billion deal to take his new social media venture public, according to a filing Monday.
Digital World Acquisition Corporation, the blank check acquisition firm that has agreed to merge with Trump Media & Technology Group Corp (TMTG), disclosed in a regulatory filing on Monday that the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (Finra) were examining the case.
Digital World said the SEC requested documents in early November relating to communications between it and TMTG, its board meetings, trading policies and procedures, identification of bank, telephone and email addresses. and the identity of certain investors.
The SEC said in its request that its investigation does not mean the regulator has concluded that anyone violated the law, Digital World said.
TMTG did not respond to requests for comment.
Massachusetts Sen. Elizabeth Warren had asked the SEC to investigate TMTG’s proposed merger with Digital World over potential violations of securities laws, including whether they sufficiently disclosed when the talks began.
The SEC declined to comment.
The inquiries come amid excitement from Trump supporters and retail investors over the planned deal. Frenzied trading in Digital World shares pushed TMTG’s valuation from $875 million in October to nearly $4 billion.
Digital World, whose shares fell 1.8% to $44.14 on Monday, said Finra had requested details in late October and early November of “surrounding events”, including a review of trades, which preceded announcement of the merger.
Finra said in its application that its investigation should not be construed as an indication that violations of Nasdaq rules or federal securities laws have occurred, Digital World added.
Finra declined to comment.
TMTG said on Saturday it had reached agreements to raise approximately $1 billion from a group of unidentified investors, bringing total proceeds from the deal to $1.25 billion. But TMTG will only receive the money if the deal is completed. A vote required for Digital World shareholders to approve the transaction has yet to be scheduled.
Some on Wall Street were hesitant to partner with Trump, and Digital World filings did not reveal which investors backed the $1 billion fundraiser.
Trump was banned from major social media platforms after his supporters’ January 6 attack on the US Capitol over fears he was inciting further violence. The Capitol attack was based on unsubstantiated allegations of widespread fraud in last year’s presidential election.
Trump remains in legal danger stemming from both his lie that his loss to Joe Biden was caused by voter fraud and his financial dealings. His personal worth has plummeted and the Trump Organization faces investigations in New York into his financial and tax affairs.
But Trump remains a vocal presence in national politics. On Monday, he made headlines for an attack on the American press – which he called “crooked bastards” – during remarks to a conservative group at Mar-a-Lago on Saturday night.
In a rambling speech, Trump also said “big tech” was “awful” and had “took away our press, they took away a voice.”
Trump continues to send statements, his chosen method of communication instead of the tweets through which he conducted much of his business.
In statements on Monday, Trump continued to complain about his former chief of staff Mark Meadows’ revelation, first reported by the Guardian last week, that Trump had returned positive and negative Covid tests three days before his first debate with Biden last year.
In its first financial projections since the merger announcement, Digital World said it expects the average revenue per user of Trump’s planned social media app, Truth Social, to reach $13.50. in 2026, with 81 million total users.
This is despite the fact that the app hasn’t even reached trial mode. TMTG plans to launch the beta version of Truth Social in the first quarter of 2022.
Digital World also said it expects TMTG to reach 40 million total subscribers by 2026. By comparison, Twitter has over 200 million daily active users.
