The former US president wants to go public with his own social network.
(Photo: AP)
new York Former US President Donald Trump has been targeted by the Securities and Exchange Commission with his new online project. The authority is scrutinizing 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, she asked for information about communication with Trump’s company and looked at the trading in shares of DWAC before its announcement to 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?
Among other things, the SEC is demanding information about communications with Trump’s company and is looking at DWAC’s trading in shares before it announced that it will work with the Trump Media & Technology Group (TMTG).
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 who want 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 shot up to over $ 90 in the past few weeks and gave up a large part of the price gains again. On Monday, the paper lost almost three percent and was quoted at $ 42.60.
Trump’s Twitter competitor is set to launch in the first quarter of 2022. However, the start of a first beta version announced for November has been postponed. The so-called SPAC (Special Purpose Acquisition Companies), through which the IPO is to be made possible, are not without risk. A SPAC initiated by the banker Orlando in China recently failed because investors jumped off again.
SEC also launches investigation against Tesla
The SEC summons from the US Securities and Exchange Commission sent the shares of Tesla rival Lucid down on Monday. The merger with the corporate shell Churchill Capital IV gave the electric car maker a stock market valuation of 24 billion dollars. After the criminal proceedings against the electric truck manufacturer Nikola, new manufacturers would be scrutinized more closely by the regulatory authorities to protect investors, said analyst Garrett Nelson of the analysis firm CFRA.
In the meantime, the SEC has also launched 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