SEC Sues Ex-CEO of Company That Took Trump Media Public

In this photo illustration, the holding screen for the "Truth Social" platform and app is seen in London, on Jan. 4, 2022. (Leon Neal/Getty Images)

The U.S. Securities and Exchange Commission (SEC) filed a lawsuit against the former CEO of a blank-check company that merged with Trump Media, accusing him of making false statements about the company’s plans to merge with the former president’s social media company.

In a civil complaint filed Wednesday evening with the U.S. District Court for the District of Columbia, the agency claimed former Digital World Acquisition Corp. CEO Patrick Orlando broke rules concerning securities by issuing false and misleading statements while he led the company.

Mr. Orlando allegedly misled investors by failing to disclose that his company had formulated a plan to acquire Trump Media & Technology Group Corp. and was pursuing the acquisition before Digital World’s initial public offering, according to the SEC filing.

The SEC namely accused Mr. Orland of making false statements by saying Digital World hadn’t contacted any merger targets and had no merger plans.

“Orlando knew these statements were false,” the SEC wrote, adding that he “had personally engaged in numerous lengthy discussions” with Trump Media’s representatives and targeted the firm for ”several months” with merger plans.

The SEC is now seeking “a permanent injunction against” the defendant that bars “him from engaging in the transactions, acts, practices, and courses of business alleged in this complaint” as well as “disgorgement of all ill-gotten gains from the unlawful conduct set forth” in the complaint. It is also seeking pre-judgment interest and civil penalties.

Earlier this year, Digital World finalized its merger with Trump Media, which owns Truth Social and uses the stock ticker DJT, with former President Trump holding a majority of the company’s shares as it went public on the Nasdaq.

In July last year, Digital World had settled regulatory charges of “material misrepresentations” to investors. The SEC had charged DWAC with alleged violations of antifraud provisions of federal securities laws. The company had agreed to a cease-and-desist order and to pay an $18 million penalty if it closed the merger.

Stock Price Fluctuation

Since Trump Media went public on the stock market months ago, shares of the firm have seen significant highs and lows. When it made its debut in March, the stock surged to more than $66, but by mid-June, or about two weeks after the former president was convicted for falsifying business records, the stock stood at about $26.

Following the attempted assassination of former President Trump over the past weekend at a Pennsylvania rally, the company’s stock shot up from around $30 on July 12, to $40 on Monday, July 15.

Trump Media CEO Devin Nunes offered his “deepest sympathies” to people who were shot and killed or wounded in the incident.

“The situation demands a fast, thorough federal investigation to determine all the circumstances of this cowardly attack and to identify if any additional persons were involved,” Mr. Nunes, a former Republican congressman from California, said in a Saturday statement.

His statement also called “for the federal government to provide any security resources requested by President Trump to guarantee his safety.”

In a May first-quarter earnings filing with the SEC, Trump Media posted a net loss of $327.6 million and total revenue of $770,500.

In June, Trump Media also told investors that if Trump Media “disagrees with President Donald J. Trump about the scope of his obligation to use, or first post on, Truth Social,” the company “lacks any meaningful remedy with respect to such disagreement.” If such an incident occurs, it could have a “material adverse effect” on the company’s business and operations, according to the filing.

The Epoch Times contacted Trump Media and Mr. Orlando by email on Thursday.

Reuters contributed to this report.