Digital World Acquisition Corp (DWAC) is the special purpose acquisition firm (SPAC) on track to merge with Trump Media & Technology Group. Former President Donald Trump’s firm wants to build a social media site named “TRUTH Social”, which would supposedly compete with Twitter and Facebook. Trump was banned from both platforms after the Capitol riots on January 6.
But before the merger was announced, the Securities and Exchange Commission (SEC) requested DWAC for information on stock trading and interactions with Trump’s organization. DWAC announced the SEC and FINRA investigations in an 8-K filing. Could the SEC be looking for evidence of secret and unreported interactions regarding the merger?
In the filing, DWAC says the SEC sent them a voluntary information and document request in early November, requesting information related to stock trading regulations, the identities of investors, and details of conversations between DWAC and Trump’s social media organization. According to the filing, neither the SEC nor FINRA have determined that the company has broken any securities laws.
News of the investigation comes only two days after Trump’s firm and DWAC announced a deal to receive $1 billion from a “diverse group of institutional investors” when the merger is complete. The names of the investors were not made public.
DWAC’s filing says the investigation doesn’t mean the SEC has found securities violations or that the SEC has an unfavorable view of the company. What are your thoughts on the investigation and potential merger?
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.