The deal that created Donald Trump‘s new social media company may have “skirted” federal law by neglecting to tell investors the recipient of its investment is the disgraced former president and by having a merger planned before its initial public offering.
“Mr. Trump — largely shut out of the mainstream financial industry because of his history of bankruptcies and loan defaults — secured nearly $300 million in funding for his new business,” The New York Times reports.
“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: the former ‘Apprentice’ contestants, a small Chinese investment firm and a little-known Miami banker named Patrick Orlando.”
As president, Donald Trump regularly railed against China, calling the deadly coronavirus the “China virus,” and battling the country in a trade war.
The Times reports that the talks between Trump and Orlando “could draw scrutiny from the Securities and Exchange Commission,” because “SPACs aren’t supposed to have a merger planned at the time of their I.P.O.”
“Given the politically fraught nature of a deal with Mr. Trump, securities lawyers said that Digital World’s lack of disclosure about those conversations could be considered an omission of ‘material information.'”
Related: Don Jr. Suggests Trump’s New Social Media Site Was Created to Help Republicans Win Elections
Within hours of Trump announcing his new media company, “Truth Social,” and appearing to inflate its value in the process, hackers were able to access the site, creating fake profiles for Trump and his former vice president, including with offensive imagery.
The day after Trump made the announcement, one major investor sold his shares, angry he had not been told Trump was the recipient.
“The idea that I would help [Trump] build out a fake news business called Truth makes me want to throw up,” Salon reported the investor said.