Securities Law

Calls to defund SEC circulate on Trump's social media platform

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The U.S. Securities and Exchange Commission headquarters.

The U.S. Securities and Exchange Commission is being targeted by critics on Truth Social, former President Donald Trump's social media platform, after a holdup in a merger with a special purpose acquisition company because of an SEC investigation.

Critics are claiming that the SEC is corrupt and motivated by politics, and the agency should be defunded, the New York Times reports.

Truth Social is the website with similarities to Twitter launched in October 2021 by Trump’s company, the Trump Media and Technology Group.

The outcry comes from people claiming to be shareholders of the Digital World Acquisition Corp., a special purpose acquisition company, which is seeking to merge with the Trump Media and Technology Group.

The SEC is investigating whether Digital World Acquisition discussed a merger with Trump before its initial public offering in September 2021 that raised $300 million. At the time, Digital World Acquisition said it had not had substantive talks about possible mergers. The merger deal with the Trump Media and Technology Group was announced a month later.

The SEC and federal prosecutors are also looking into an unusual spike in trading of Digital World Acquisition shares before the merger announcement.

Digital World Acquisition could get a one-year extension to complete the merger in hopes that the SEC probe would be over by then. But the SPAC will need the support of 65% of its shareholders by Oct. 10—when a special meeting takes place to count the vote.

Adam C. Pritchard, a professor at the University of Michigan Law School, told the New York Times that Trump may be “creating the narrative” to explain why the deal fell apart by focusing on SEC action. Pritchard doesn’t think that the problem is political.

“The agenda is not to get Trump, it’s to get SPACs,” Pritchard told the New York Times.

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