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Chinese Firm Leading Trump's SPAC IPO Has Been Under SEC Investigation

Arc Capital has been investigated for misrepresenting the expanse of the shell companies they represent.
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Arc Capital, the Chinese firm helping former President Donald Trump take his media company public, has been the subject of investigations by federal securities regulators. 

The Shanghai-based company has been under investigation for misrepresenting shell companies with no products and few employees as growth companies, the Washington Post reported Thursday. 

Arc Capital has repeatedly helped create or finance companies with little or no revenue or customers and listed office locations that are actually P.O. boxes, according to the Post's review of documents tied to the investigations. 

Earlier this year, Arc helped create Digital World Acquisition, an investment company that has raised over $1.2 billion to conduct a merger with Trump Media and Technology Group. 

Trump Media and Technology was looking to raise up to $1 billion by selling shares to hedge funds, according to a recent report. 

The company was already in line to receive nearly $300 million in its deal to debut publicly through a SPAC merger with Digital World Acquisition. 

"There’s a shell company basically merging with another shell company, because, as far as we know, the Trump media company hasn’t yet been formed,” Robert B. Lamm, a lawyer who chairs the securities practice at Florida-based law firm Gunster, told the Post. 

In 2017, the U.S. Securities and Exchange Commission stopped three Arc-backed companies from publicly selling shares due to "material misstatements and omissions."

Despite the scrutiny, no charges have ever been brought against Arc and the current status of any investigation is still unclear, according to the Post.