Elizabeth Warren urges SEC to investigate Trump SPAC deal

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FILE PHOTO: U.S. President Trump pauses as he announces his decision to withdraw from Paris Climate Agreement at White House in Washington
FILE PHOTO: U.S. President Donald Trump pauses as he announces his decision that the United States will withdraw from the landmark Paris Climate Agreement, in the Rose Garden of the White House in Washington, U.S., June 1, 2017. REUTERS/Kevin Lamarque/File Photo

November 18, 2021

By Chris Prentice and Sohini Podder

(Reuters) – U.S. Senator Elizabeth Warren on Thursday urged Securities and Exchange Commission chairman Gary Gensler to investigate a planned merger between former U.S. President Donald Trump’s social media company and a blank-check firm for potential violations of securities laws.

Trump Media and Technology Group may have privately held merger discussions with special purpose acquisition company (SPAC) Digital World Acquisition Corp but did not disclose them in its SEC filings or other public documents, the letter said.

A media report stated that Patrick Orlando, the chief executive officer of the blank-check firm, may have held discussion with Trump as early as March, months prior to the SPAC’s initial regulatory filing in May and its public offering in September.

A spokesperson for the SEC declined to comment, saying “We don’t comment on the existence or nonexistence of a possible investigation.”

Regulatory filings by Digital World between May 25 and Sept. 8 stated that the company has not, nor has anyone on its behalf, held any discussion with potential targets.

“The reports about DWAC and Trump Media and Technology Group appear to be a textbook example of a SPAC misleading shareholders and the public about materially important information,” Warren said in her letter.

Warren, who has requested a response to the letter by Nov. 29, added that the omission has the potential of trapping retail investors in a stock bubble while enriching the SPAC’s sponsors and the leadership of its target.

SPACs, shell companies which are formed with the intent of merging with a private company to take it public, are required to disclose any direct or indirect discussions with potential targets.

Both Trump Media and Digital World were not immediately available for comment.

The deal, announced in October, would create a social media app, TRUTH Social, which Trump said would “stand up to Big Tech” companies such as Twitter and Facebook.

(Reporting by Sohini Podder in Bengaluru and Chris Prentice in Washington; Editing by Maju Samuel)

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