In October 2021, former president Donald Trump announced that his media company, the owner of the platform Truth Social, had sealed an incredible deal: a merger with a SPAC that would deliver to his firm $300 million toward his promise of giving “a voice to all,” The Washington Post reports.
By then, however, the insider trading by investors in the SPAC, Digital World Acquisition, had already begun, according to documents filed recently in the criminal case against three Digital World investors who’ve been charged with securities fraud in New York federal court.
Digital World’s chief executive, Patrick Orlando, a Miami financier Trump had hosted at his golf clubs, had been telling investors privately for months that he’d been talking with Trump about the deal, the filings assert — a violation of federal securities law, the Securities and Exchange Commission would say later, given his company’s pledge in regulatory filings that its leaders had held no talks with any merger targets. Orlando was later removed as CEO but remains on the Digital World board.
The SEC last July announced settled fraud charges against Digital World for making material misrepresentations in forms filed with the SEC as part of the SPAC’s IPO and proposed merger with Trump Media & Technology Group. The commission said that Digital World misled investors and the SEC by failing to disclose that it had formulated a plan and was already pursuing the acquisition of TMTG prior to the SPAC’s IPO.
Digital World will pay an $18 million penalty if it completes the deal, the SEC said. Read more.
