Just weeks before the company was served with back-to-back federal subpoenas, Donald Trump has left the board of the Trump Media & Technology Group (TMTG), the parent company of his social media platform Truth Social According to the Sarasota Herald-Tribune, the ex-President is one of six members removed from the board, including his son Don. Jr., former White House staffer Kashyap Patel, and Truth Social counsel, Scott Glabe.
Trump removed himself and Junior from the Board of ‘Trump Media’ shortly before federal subpoenas were served on the company. https://t.co/AR9bxP43Zq
— Ron Filipkowski (@RonFilipkowski) July 7, 2022
Expanding on the Securities and Exchange Commission’s November inquiry into the merger between Trump’s social media company and Digital World Acquisition Group, the special purpose acquisition corporation (SPAC) being used to take the company public, TMTG was served with an Securities and Exchange Commission subpoena on June 27th, almost three weeks after Trump removed himself from the board. Less than a week later, they were hit with a grand jury subpoena from the Southern District of New York.
The SPAC Digitial World Acquisition Group raised eyebrows with its 2021 SEC filing for the merger, having raised over $1 billion, but leaving off the names of investors, or “sponsors,” as they’re called.
This triggered inquiries from both the SEC and the Financial Industry Regulatory Authority. While the FINRA was only interested in the blank check company’s trading history, the SEC wanted “trading policies, the identities of some of its investors, and details on the communications between the SPAC and Trump Media.” According to Fortune:.
“In the world of SPACs, discussions with possible merger partners are limited to after the SPAC goes public as sponsors are not supposed to be able to take their companies public with a target already identified.”
The New York Times reported that Trump and Patrick Orlando, a sponsor of the SPAC, were communicating for months discussing a deal prior to going public. Though SPACs have fewer regulations than traditional IPOs, there are still rules. In a mid-June SEC filing, Digital World Acquisition Corp. said the SEC was looking into possible communications between DWAC and other potential “targets.” Digital World warned investors of the potential consequences:
“Any resolution of the investigation could result in the imposition of significant penalties, injunctions, prohibitions on the conduct of Digital World’s business, damage to its reputation, and other sanctions against Digital World.”
The subpoenas served on TMTG, signal the SEC may be on to something. The grand jury subpoena could mean a criminal investigation is in the works. Fortune reported that Trump would wield “virtually unlimited” power if the merger is successful, being able to nominate anyone of his choosing to the board no matter how “dishonest, illegal, immoral, or unethical,” and there would be no breach of contract. From what we know about the six-times bankrupt failed businessman, a billion dollars of other people’s money and unchecked power aren’t a good mix.
We’ll have to stay tuned to see what the SEC and FINRA investigations uncover.
Follow Ty Ross on Twitter @cooltxchick