On Monday, Digital World Acquisition Corporation, which is the special purpose acquisition company (SPAC) that will merge with Trump’s Trump Media Technology Group, said in a filing that it was under investigation by two regulatory bodies–the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).
The investigations by the regulatory bodies were disclosed in an 8-K filing by Digital World. Following the announcement, shares of Digital World fell by three percent and were trading at about $43.21 per share, according to a report by CNBC.
The investigations began in early November, according to Digital World. Digital World also said that it was cooperating with the regulators. It also said that “the investigation does not mean that the S.E.C. has concluded that anyone violated the law or that the S.E.C. has a negative opinion of D.W.A.C. or any person, event, or security.”
Earlier, the New York Times had reported that Patrick Orlando, who is the CEO of Digital World, had talks of a deal with representatives of Trump Media, sometime in March. SPACs are entities that raise money through an IPO and then acquire a company. They cannot be in merger talks, without informing their investors.
Digital World said that the SEC asked for documents pertaining to meetings of Digital World’s board. It also asked for “certain documents and communications between D.W.A.C. and T.M.T.G.”
The company said that the FINRA asked Digital World to provide information about trading activity that had taken place before the announcement of the merger that they were planning with Trump Media. The announcement of the merger between D.W.A.C. and T.M.T.G. was made on October 21, 2021.
The filing was made two days after the two companies DWAC and TMTG said that they had reached agreements that would give them $1 billion in committed capital. This amount would be received by them when the merger was finalized and would be obtained from a “diverse group of institutional investors.”
When asked for comment by CNBC, a spokeswoman for Trump’s company did not respond, as yet.
