Donald Trump’s New Social Media Company Under Investigation From Federal Regulators

Donald Trump’s New Social Media Company Under Investigation From Federal Regulators

Federal regulators including the SEC and Financial Industry Regulatory Authority (FINRA) are investigating Donald Trump’s $US1.25 billion ($A1.78 billion) special purpose acquisition company (SPAC) deal to float his new social media venture on the stock market.

A SPAC is a company that has no commercial operations but accumulates reserves of cash through an initial public offering (IPO) with the purpose of merging with an existing company. These companies are also known as “blank check companies.”

In Trump’s case, he launched a new company called Trump Media and Technology Group (TMTG) which would merge with a SPAC called Digital World Acquisition Company (DWAC).

If completed, this deal would turn Trump’s new media company into one that’s publicly traded on the NASDAQ.

As reported on by CNBC, Trump’s company plan was to launch a social media platform called “Truth Social,” which would ostensibly compete with the likes of Twitter and Facebook. Notably, both companies have banned the former President.

As has been stated in a public filing with the SEC, “DWAC has received certain preliminary, fact-finding inquiries from regulatory authorities, with which it is cooperating.”

It added, “According to the SEC’s request, 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.”

The information in question pertains to, documents relating to meetings of DWAC’s board of directors, policies and procedures relating to trading, banking, telephone, and email address identification, as well as the identities of certain investors.

Massachusetts senator and unsuccessful 2020 Democratic candidate, Elizabeth Warren, had also asked the SEC to investigate TMTG’s proposed merger with DWAC over potential violations of securities laws.

As reported by The Guardian, despite the investigations, Trump supporters and retail investors have been frantically trading DWAC shares increasing TMGT’s valuation from $US875 million ($A1.2 billion) in October to close to $US4 billion ($AUD 5.7 billion).

In the first financial forecast since the announcement of the merger, DWAC said it expected the average revenue per user of Trump’s planned social media app, Truth Social, to grow to $13.50 in 2026, with 81 million total users.

Investigations are ongoing but Trump’s has once again maintained in Mar-a-Lago that the American media are full of “crooked bastards,” “fake news” and are an “enemy of the people.”

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