Sen. Warren urges SEC to investigate Trump SPAC deal

Warren said the SPAC involved in Trump deal may have committed securities violations

Sen. Elizabeth Warren, D-Mass., urged the SEC Thursday to investigate for potential securities violations a planned merger between former President Trump’s media firm and the special-purpose acquisition company that planned to take it public.

In a letter to SEC Chairman Gary Gensler, Warren expressed concern that the SPAC, Digital World Acquisition Corp., "may have committed securities violations by holding private and undisclosed discussions about the merger as early as May 2021." The deal was formally announced in October.

"The reports about DWAC and Trump Media and Technology Group appear to be a textbook example of a SPAC misleading shareholders and the public about materially important information," Warren said.


Sen. Elizabeth Warren, D-Mass., conducts a news conference in the Capitol March 1, 2021, to introduce the Ultra-Millionaire Tax Act, which would tax high net worth households. (Photo By Tom Williams/CQ-Roll Call, Inc via Getty Images)

In October, Trump said he would launch a publicly-traded social media platform called "Truth Social," following a merger between his newly formed Trump Media & Technology Group and DWAC. A release said the platform would roll out nationwide during the first quarter of 2022.

Warren said she has been "concerned for some time" about SPACs, which gained popularity in recent months as a method to quickly take a company public without a traditional initial public offering. The surge in popularity has attracted scrutiny from lawmakers and federal regulators. 

President Donald Trump speaks at a campaign rally at American Airlines Arena in Dallas, Texas, Thursday, Oct. 17, 2019.  (AP Photo/Andrew Harnik / AP Newsroom)

The Democrat cited a New York Times report that Patrick Orlando, DWAC’s chairman and CEO, was involved in discussions with Trump since March. However, the company’s SEC filings from May through September said it has "not selected any specific business combination target and we have not, nor has anyone on our behalf, initiated any substantive discussions, directly or indirectly, with any business combination target."

"This omission had the result of enriching big investors while trapping retail investors in a stock bubble," Warren said. "After DWAC announced their proposed merger with Trump Media and Technology Group, at least four institutional investors — including D.E. Shaw, Lighthouse Investment Partners, ATW Spac Management and Saba Capital — sold their unrestricted shares."


Sen. Elizabeth Warren, D-Mass., is joined from left by, Sen. Ed Markey, D-Mass.; Rep. Ilhan Omar, D-Minn.; Rep. Ayanna Pressley, D-Mass.; and Rep. Alexandria Ocasio-Cortez, D-N.Y., at the Capitol in Washington, Tuesday, Sept. 21, 2021.  (AP Photo/J. Scott Applewhite)

The SEC declined to comment.

"We don’t comment on the existence or nonexistence of a possible investigation," an SEC spokesperson said.

DWAC shares fell more than 5% in trading Thursday afternoon and are down about 40% from their peak after the planned merger was announced.