Wall Street’s top financial regulators are investigating former US president Donald Trump’s $US1.25 billion ($A1.77 billion) deal to float his new social media venture on the stock market, a filing shows.
Digital World, the blank-check acquisition firm that agreed to merge with Trump Media & Technology Group, disclosed in a regulatory filing on Monday that the US Securities and Exchange Commission and the Financial Industry Regulatory Authority were probing the deal.
Trump Media & Technology Group did not respond to requests for comment.
Digital World said the SEC asked for documents in early November relating to communications between Digital World and TMTG, meetings of Digital World’s board, policies and procedures relating to trading, the identification of banking, telephone, and email addresses and the identities of investors.
The SEC stated its investigation does not mean the regulator has concluded anyone violated the law, Digital World said.
US Senator Elizabeth Warren had asked the SEC to investigate the proposed merger over potential violations of securities laws, including whether they had sufficiently disclosed when deal talks began.
The SEC declined to comment on Monday.
The investigations come amid excitement among Trump supporters and investors over the planned deal.
Frantic trading of Digital World’s shares has driven TMTG’s valuation from $US875 million ($A1.2 billion) in October to close to $US4 billion ($A5.7 billion).
Digital World said FINRA had asked for details in late October and early November about “surrounding events”, including a review of trading, that preceded the announcement of the merger.
A review of trading data showed unusual activity on October 20 ahead of the merger’s announcement later that day.
More than one million warrants, worth about $US500,000, were traded, compared with only 119,000 warrants the previous day, according to Refinitiv data.
FINRA said in its request its inquiry should not be construed as an indication that any violations of Nasdaq rules or federal securities laws have occurred.
FINRA declined to comment.
TMTG said on Saturday it had entered into agreements to raise about $US1 billion from a group of unidentified investors, bringing the deal’s total proceeds to $US1.25 billion.
But TMTG will receive this money only if the deal is completed. A vote required for Digital World shareholders to approve the transaction has yet to be scheduled.
Some on Wall Street have been reluctant to associate with Trump, and the Digital World filings did not disclose which investors backed the $US1 billion fundraising.
Trump was banned from leading social media platforms after the January 6 attack by his supporters on the US Capitol, amid concerns he would inspire further violence.
The Capitol attack was based on unsubstantiated claims from Trump and others of widespread fraud in last year’s presidential election.
With the exception of Trump being named TMTG chairman, the company had not identified any of its top executives until Monday, when it announced Devin Nunes would step down as a US representative to join as its CEO in January.
Nunes, the top Republican on the House Intelligence Committee, has been one of Trump’s staunchest allies in Congress.
TMTG plans to launch the beta version of Truth Social in the first quarter of 2022.
Digital World said it expected TMTG to reach 40 million subscribers by 2026. Twitter has more than 200 million daily active users.