new York Former US President Donald Trump has been targeted by the Securities and Exchange Commission with his new online project. The authority is investigating the company through which Trump wants to bring his social network “TRUTH Social” to the stock exchange. The company called Digital World Acquisition (DWAC) announced on Monday that it had received a request for information from the SEC.
Among other things, the supervisory authority is demanding information about communications with Trump’s companies and is looking at the trading of shares in DWAC before its announcement that it will work with the Trump Media & Technology Group (TMTG).
A subpoena from the US Securities and Exchange Commission also caused the shares of Tesla rival Lucid to collapse by up to 19.5 percent. “The investigation appears to relate to the business combination between Churchill Capital IV and Atieva and to certain projections and statements,” said Lucid.
The SEC did not want to comment on their actions. The US authorities are scrutinizing more and more companies that are joining forces with a so-called Special Purpose Acquisition Company (Spac) for an IPO.
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Did DWAC hold talks with Trump in advance?
The rules stipulate that a Spac provider first collects money from investors and then looks for a takeover target. According to US media reports, DWAC could have had talks with Trump in advance.
TMTG is to be brought to the US technology exchange Nasdaq through the back door via the merger with Digital World Acquisition. The former Deutsche Bank investment banker Patrick Orlando is behind DWAC. DWAC has raised $ 293 million to be made available to Trump’s new network.
The merger with the corporate shell Churchill Capital IV gave the electric car maker a stock market valuation of 24 billion dollars.
(Photo: Reuters)
The announcement of the regulatory investigation comes just two days after DWAC announced a deal with donors looking to invest an additional $ 1 billion in Trump’s media company. It is currently unclear whether the investors, whose names were not made public, knew about the investigations by the regulators.
DWAC stock was valued at $ 10 in its original deal with Trump Media in October, the standard at Spacs. After the deal was announced, the paper temporarily skyrocketed to over $ 90 and gave up a large part of the price gains in the past few weeks. On Monday, the paper lost almost three percent and was quoted at $ 42.60.
Trump’s Twitter competitor is set to start in the first quarter of 2022. However, the start of a first beta version announced for November has been postponed. Spacs are fundamentally not without risk. A Spac initiated by the banker Orlando in China recently failed because investors jumped off again.
Republican Nunes becomes CEO of Trump company
After the US stock market closed, it was also announced that Republican MP Devin Nunes was moving from Congress to the head of Donald Trump’s new social media company at the turn of the year. As of January 2022, Nunes will be head of Trump Media & Technology, the company announced on Monday.
Nunes understood that “we have to stop the liberal media and prevent the tech giants from destroying the freedoms that make America great,” Trump said in a statement. Nunes said it was time to reopen the internet and “allow ideas and opinions to flow freely without censorship.”
Nunes previously served as chairman of the House Intelligence Committee. He is an ardent supporter of Trump and supported the ex-president in the investigation into Russian influence on the 2016 election and in the impeachment proceedings in 2019 in the Democratic-dominated chamber.
DWAC’s shares rose more than seven percent in after-hours trading after it was revealed that Nunes had been transferred to the helm of TMTG. “I am honored that President Trump has asked me to lead the mission and the world-class team that will make this happen,” Nunes said in the press release.
SEC also launches investigation against Tesla
It was also announced on Monday that the SEC had also opened an investigation against Tesla. The authority reacted to a tip according to which the US electric car manufacturer in its solar division should not have properly informed its shareholders and the public about the risk of fire in defective photovoltaic systems for years.
Tesla shares fell by around four percent. Electric car startups like Canoo, Faraday Future and Fisker have also come under pressure.
More: US Securities and Exchange Commission investigates Tesla solar division.