The Securities and Exchange Commission is investigating the planned merger of Donald Trump’s social media venture with a so-called ‘blank check’ company. The Financial Industry Regulatory Authority is also participating in the probe.

The SEC is investigating a deal between Donald Trump’s new social-media venture and a SPAC that would take Trump's firm public, a securities filing said https://t.co/mJVPUx8Yn0

— The Wall Street Journal (@WSJ) December 6, 2021

In October, Trump announced that he was going to launch TRUTH Social, an online platform he hopes will contend with the likes of Twitter and Facebook.

The Trump-backed vehicle behind TRUTH Social – Trump Media & Technology Group Corp. (TMTG) – said it would merge with Digital World Acquisition Corporation (DWAC) in an effort to raise money. DWAC is a special purpose acquisition company (SPAC), which exist only to buy other entities. SPACs must disclose any merger talks they have conducted before they execute an initial public offering.

But multiple outlets have reported that the CEO of DWAC had a meeting with Trump months before the company went public and that the conversation was never shared with investors.

“If the meeting is deemed to have represented substantive deal talks, it could violate SEC rules,” according to The Wall Street Journal.

"Mr. Trump met with Digital World Chief Executive Patrick Orlando early this year and before the SPAC had raised money….SPACs aren’t supposed to have a target company identified at the time they initially raise money." https://t.co/wYwfZehHy0

— Julie Bykowicz (@bykowicz) December 6, 2021

CNBC reports:

DWAC also said Monday that in early November, the SEC sent DWAC a voluntary information and document request that sought documents related to DWAC board meetings, policies about stock trading, the identities of certain investors and details of communications between DWAC and Trump’s social media firm.

The investigations by the SEC and the FINRA were made public Monday in securities documents submitted by DWAC.

“The inquiry should not be construed as an indication that FINRA has determined that any violations of Nasdaq rules or federal securities laws have occurred,” the DWAC filing states. “According to the SEC’s request, the investigation does not mean that the SEC has concluded that anyone violated the law or that the SEC has a negative opinion of DWAC or any person, event, or security.”

The Journal adds:

Digital World said over the weekend that it is raising $1 billion from investors in a private investment in public equity, or PIPE, associated with the merger. That money and some or all of the roughly $287.5 million held by the SPAC could be used to grow Trump Media & Technology Group, though SPAC investors can pull money out before the deal closes.