FINRA and SEC are investigating SPAC in Trump’s technology deal

At the Republican Forum on the Origin of the Coronavirus in Washington, DC on June 29, 2021, Devin Nunes, the soon-to-be former representative and future corporate faller, sees it here.

At the Republican Forum on the Origin of the Coronavirus in Washington, DC on June 29, 2021, Devin Nunes, the soon-to-be former representative and future corporate faller, sees it here.
Photo: Kevin Deitch (Getty Images)

Donald Trump strives to launch a MAGA-centric technology company to compete with companies such as Google and Facebook Get a new CEO on Monday. It also revealed that it is under investigation by the FBI.

The Trump Media and Technology Group (TMTG) will be at the helm of Rep. Devin Nunes, Trump’s flatterer, and his previous experience in the tech world is largely a failure Lawsuit against Twitter Through a mock account called “Devin Nunes’s Cow”. Nunes will resign from Congress to become the CEO of the company, which is currently merging with a special purpose acquisition company (SPAC) called Digital World Acquisition Corp (DWAC), starting in January 2022. The federal government clearly does not approve of this deal.

According to reports Washington post, DWAC in one Securities and Exchange Commission filing It has received separate inquiries from the Financial Industry Regulatory Authority (FINRA) and the US Securities and Exchange Commission. First, DWAC admitted that FINRA sent them “certain preliminary fact-finding investigations” at the end of October and early November, and both cases were related to SPAC stock trading. The SEC separately sent inquiries to DWAC, requesting information about SPAC board meetings, as well as information about investor and company communications.

As the Post wrote, this in itself is not necessarily the conclusion of DWAC or anyone related to it Broke the law. But receiving inquiries from two independent regulators is never good news, and there are many signs that something suspicious may be happening here.

SPAC is Basically a shell company Merging with a private company in order to quickly bring the merged entity to the public market; they are also a tool for companies seeking to go public to attract more investor capital. In this case, the company seeking to go public as soon as possible is TMTG, whose partners have already caused serious damage to the stock market. After the announcement of the TMTG-DWAC merger on October 20, DWAC’s stock price soared more than 800%.Since these companies only provide investors with very thin documents, such as what TMTG’s business model is that the skyrocketing share price seems to be based almost entirely on the buzz associated with the name of the former president. December 4, Bloomberg report DWAC/TMTG Claim to have recently signed Clear excess transactions US$1 billion from unidentified investors.

According to TMTG promotional materials, The company intends to create “a media power to contend with the free media consortium and counterattack Silicon Valley’s “large technology” companies, which use their unilateral power to suppress American opposition.”

The rest of the document is mainly a reprint of complaints about conservative culture wars, such as Trump’s Twitter ban or the need for “non-awakening” entertainment.Its only reliable proposal is Truth Social, a Twitter/Facebook clone that may have violated License terms Its open source code base.In addition, it also mentions TMTG+, an “on-demand streaming service”, and there is almost no evidence that any work has been completed. However, there is also a “long-term opportunity TMTG technology stack” that will somehow select Amazon Web Services, Azure, Google Cloud and Stripe. There is no mention of company officials, employees or operations.

It is not clear what FINRA and SEC might be looking for.However, DWAC’s stock price soared to Up to $175 per share Since then, the stock price has fallen sharply to around $44 per share.The post pointed out In a letter to the US Securities and Exchange Commission on November 17, Senator. Elizabeth Warren expressed concern that the company does not have an obvious business model, which may be an excuse for related parties to deceive individual investors​​.this New York Times It is also reported that as early as March 2021, before DWAC was listed on the stock market in September, DWAC CEO Patrick Orlando discussed the TMTG transaction with Trump.This may cause them to violate financial regulations that require SPACs No specific goal Keep in mind when they raise funds; these rules (at least in theory) are intended to prevent someone from using SPAC as a backdoor tool to bring the company to the market without all those pesky investor disclosures.

“No one can be above the law-during the proposed merger of Digital World Acquisition Corp and Trump’s media company, there may be serious securities law violations,” Warren told CNN.

Nunez Told CNBC in a statement He was “humbly and honored” to lead Trump’s new cause, which followed several other MAGA-themed train wrecks. After being banned and resigned by almost all major social networks, Trump launched a blog called “From Donald J. Trump’s Desk”. A few weeks later, he closed it after receiving an email Shamelessly low visitor rateAfter that, his long-time aide Jason Miller left the president’s services and took charge of a social media site called GETTR, a disastrous site that itself seemed to be originally established as a vanity project For a fugitive Chinese billionaireMiller seems to have always thought that Trump would join GETTR to accelerate its user growth, but the former president has never done so.The website has been paralyzed since then. Trump’s team seems to have twisted the knife and inserted a graphic in which the GETTR logo appears to be Superimposed on a Chinese flag Enter the TMTG promotional package.

DWAC and TMTG did not immediately respond to requests for comment on this story. If we receive a response, we will update this article.

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