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Last fall, Donald Trump and his team launched the Trump Media & Technology Group, which appeared to have bold, multimedia ambitions: It said it intended to compete with both Twitter and Netflix. To that end, the operation even hired a high-profile CEO: Former House Intelligence Committee Chairman Devin Nunes, despite his lack of media experience, announced he’d resign to lead the nascent company.
It hasn’t exactly been smooth sailing. As regular readers know, the Twitter-like Truth Social app was plagued by technical difficulties and missed deadlines. Some top executives’ resignations made matters worse.
It didn’t help when the operation — ostensibly founded on the idea of unfettered political discourse — was accused last week of banning users who posted information about the Jan. 6 committee’s hearings. There have been similar accusations this week.
For Team Trump, questions along these lines are relatively unimportant. It’s the questions about the operation’s financing that really matter.
Because the former president has a history of bankruptcies and loan defaults, he couldn’t simply go to a major American financial institution to help finance his media venture. So, Trump agreed to merge his operation with a special purpose acquisition company (SPAC). As The New York Times has reported, “To get his deal done, Mr. Trump ventured into an unregulated and sometimes shadowy corner of Wall Street, working with an unlikely cast of characters.”
As we discussed late last year, the Republican ended up working with a dubious Chinese operation, all of which apparently drew the interest of investigators at the SEC and the Financial Industry Regulatory Authority (FINRA), which typically investigates things like insider trading.
This scrutiny appears to be intensifying. Axios reported yesterday:
Federal securities regulators have expanded their investigation into the planned merger between a blank check acquisition company and former President Trump’s social media business, known as Truth Social, according to a Monday morning filing with the SEC.... The Securities and Exchange Commission is investigating communications between the blank check company, called Digital World Acquisition Corp., and Trump. Of particular interest would be if the two sides negotiated prior to DWAC going public, which would have been illegal.
I won’t pretend to be an expert in the nuances of financial regulatory examinations, but a Reuters report characterized the investigation as “deepening” since beginning last fall, while Fortune magazine said the probe is “expanding.”
The company told The Washington Post, meanwhile, that none of this should be construed as an indication that investigators have concluded that anyone has violated the law. By all appearances, that’s a perfectly accurate response.
Of course, when a former president’s troubled company feels the need to make such a declaration, that’s not great, either.
The company also said yesterday that the investigation from the SEC and FINRA could delay the larger deal, which almost certainly isn’t what Trump wants to hear: Axios’ report added, “Truth Social’s financial prospects are heavily reliant on investment tied to the merger, which may never come to pass.”