Trump shell company faces SEC investigation

The special purpose acquisition company taking former President Donald Trump's social media startup public is under investigation by federal regulators, the company said Monday.

Rep. Devin Nunes (R-Calif.) separately announced Monday he was resigning from Congress and would become CEO of the new firm, Trump Media & Technology Group, in January. Nunes, a close Trump ally, is the top Republican on the House Intelligence Committee.

The SPAC, Digital World Acquisition Corp., said in a public filing that it had received inquiries in recent weeks from the Securities and Exchange Commission and the Financial Industry Regulatory Authority. SPACs are shell companies that acquire private firms for the purpose of selling shares on stock exchanges.

Digital World said it received “preliminary, fact-finding inquiries” in late October and early November from FINRA related to a review of trading that preceded the Oct. 20 announcement it was merging with Trump Media. A FINRA spokesperson confirmed the inquiry.

The company said it also received a request from the SEC for information and documents in early November. The SEC did not respond to a request for comment.

SPACs, which have seen a boom as alternatives to traditional IPOs, have come under growing scrutiny by regulators and lawmakers because of concerns that investors may not have enough information to understand the risks involved.

Sen. Elizabeth Warren (D-Mass.) last month asked the SEC to look into the Trump SPAC merger. Warren said in a letter to SEC Chair Gary Gensler that Digital World may have violated securities rules by failing to disclose discussions it was reportedly having about merging with Trump Media & Technology Group. Warren cited a New York Times story that said the SPAC's CEO was discussing the deal with Trump well before the company started trading on the Nasdaq in October.

Digital World and Trump Media did not respond to requests for comment Monday.