Warren Wants SEC to Probe Trump SPAC Deal for Violations

Sen. Elizabeth Warren pressed the Securities and Exchange Commission (SEC) Thursday (Nov. 18) to look into possible securities violations in a proposed special purpose acquisition company (SPAC) merger between President Donald Trump’s social media platform and Digital World Acquisition Corp.

Warren, who was the object of Trump’s ire during his march to the White House in 2016, wrote a letter to SEC Chairman Gary Gensler saying DWAC “may have committed securities violations by holding private and undisclosed discussions about the merger as early as May 2021.”

“The reports about DWAC and Trump Media and Technology Group appear to be a textbook example of a SPAC misleading shareholders and the public about materially important information,” Warren wrote in the letter.

At least four hedge funds — D.E. Shaw, Lighthouse Investment Partners, ATW Spac Management and Saba Capital — sold their unrestricted DWAC shares after the deal was announced, and DWAC’s shares rose by as much as 1,657% in the first week, before falling from $175 per share to $56.50 per share, the letter stated.

Warren wrote to Gensler that the Trump SPAC looks “suspiciously like a scheme in which ‘the salesmen behind all of this should be fine, even if those who fall for their sales pitch get screwed,’” Warren wrote, quoting a line from a Forbes article, per a CNBC report.

The proposed merger would end with Trump Media and Technology Group becoming a publicly listed company, according to the report.

Last month, Warren called on the Consumer Financial Protection Bureau (CFPB) to curb cryptocurrency payment abuse, adding that Americans making use of the popular digital coins are more at risk of fraud and other related abuses, including being unable to get their money out of crypto exchanges.

Read more: CFPB Has Power To Stop Crypto Fraud

Lawmakers of both major U.S. parties have said they’re worried about the possibility of cryptocurrency-related fraud or crime. CFPB Director Rohit Chopra told the Senate Banking Committee last month that he plans to look at how Facebook and other tech giants are using cryptocurrencies as part of a larger investigation on how the companies are using data from consumers.