Wall Street regulators have launched an investigation into Donald Trump’s social media company, which intends to merge with the Digital World special purpose acquisition company (SPAC).
The US Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) are investigating potential breaches of securities laws, including rules concerning the disclosure of information about the deal talks.
Trump stopped short of using his ‘fake news’ catchphrase, but, in an interview with a conservative American outlet, Newsmax, said: "you know, this is just a continuation of witch hunts [where] anything you do they want to look at it," the 45th US President commented.
Trump Media & Technology Group (TMTG) agreed to merge with the Digital World SPAC vehicle in October and revealed on Saturday that it has entered deals to raise approximately US$1bn from unidentified investors, if the deal goes ahead, taking the total proceeds to US$1.25bn.
In early November, the SEC also demanded details of Digital World's meetings surrounding its board, policies, and procedures relating to trading, as well as the identities of certain investors.
The SEC highlighted in this request to Digital World that its launch of an investigation does not mean it has found any violations of the law.
Digital World was launched on the stock market in mid-October with the intention of purchasing a private company.
Such ‘cash shell’ companies, which list effectively as placeholders, have become increasingly popular in recent years.
Trump ally Devin Nunes announced yesterday he will resign as US congressman to join TMTG, which is to be chaired by Trump as chief executive from January.