Nearly 18 months ago, an obscure investment banker unveiled a blockbuster deal: His SPAC would bankroll a social media outfit that former President Donald J. Trump planned to start with hundreds of millions of dollars.
Today, the social media platform Truth Social has millions of users, including the former president, the New York Times notes. But the company that was supposed to bankroll it has been swarmed by federal investigators. In late March, the deal’s architect, Patrick Orlando, was ousted as CEO of Digital World Acquisition.
Officials at Digital World hoped that Orlando’s departure would pacify federal authorities and lead to the approval of the merger with Truth Social’s parent company, Trump Media & Technology Group, according to three people briefed on the matter.
That deal has been waylaid by two intensifying federal investigations. One is focused on whether preliminary merger discussions between Digital World and Trump Media violated federal securities laws. The other investigation is looking at whether a group of early investors in Digital World — who were brought into the deal by Orlando — engaged in improper trading.
If the merger is not completed in the next six months, Digital World will have to return the $300 million it raised from investors in 2021 through an IPO. But it is not clear that the investigations by the Securities and Exchange Commission and federal prosecutors in Manhattan will be completed in time to permit the SEC to approve the merger as required.
Executives of Trump Media and some shareholders of Digital World have accused the federal regulator of trying to run out the clock. In February, officials with Trump Media sent a letter to several Republican congressmen asking them to open an investigation into the SEC’s refusal to approve the deal, accusing regulators of being biased against the former president. Read more.
