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Donald Trump Media SPAC Digital World Acquisition In SEC Probe Linked To October Merger

The so-called blank check company preparing to bring Donald Trump's Truth Social media company public is being investigated by the U.S. Securities and Exchange Commission.

Digital World Acquisition Corp.  (DWACU) - Get Digital World Acquisition Corp. Report, the so-called blank check group tied to former President Donald Trump's nascent media company, is being investigated by the U.S. Securities and Exchange Commission, the company said Monday.

Digital World said it is co-operating with the request, which also included the Financial Industry Regulatory Authority (FINRA), while describing them as "preliminary, fact-finding inquiries" linked to its merger with the former President's Trump Media & Technology Group.

The merger followed Trump's plans to return to social media through the launch of a new app dubbed "Truth Social",  which he called a "rival to the liberal media consortium and fight back against the "Big Tech” companies of Silicon Valley, which have used their unilateral power to silence opposing voices in America."

Trump was banned from many of the major social media platforms -- including Twitter  (TWTR) - Get Twitter, Inc. Report and Facebook  (MVRS) - Get Meta Report -- for his role in igniting the rioters that stormed the Capitol building on January 6 in a failed effort to overturn his election defeat to President Joe Biden.

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"DWAC received a request for information from FINRA surrounding events (specifically, a review of trading) that preceded the public announcement of the October 20, 2021 Merger Agreement," the company said in an SEC filing Monday. 

"Additionally, in early November 2021, DWAC received a voluntary information and document request from the SEC which sought, inter alia, documents relating to meetings of DWAC’s Board of Directors, policies and procedures relating to trading, the identification of banking, telephone, and email addresses (and) the identities of certain investors," the filing added.

Digital World shares were marked 4.3% lower in early Monday trading to change hands at $43.05 each, a move that still pegs it more than 335% north of its September listing price of $9.96 each.  

Digital World is also providing around $293 million as part of a capital raising effort from a group of unnamed investors in TMTG that the group says will top $1.24 billion.  

After it launch, DWAC said Truth Social is forecast to have 81 million registered users by 2026, when average revenues per user will rise to $13.50.