(Bloomberg) -- The US Securities and Exchange Commission sued Patrick Orlando, the former chief executive of the blank-check firm that helped bring Donald Trump’s social media company public, for allegedly misleading investors about his firm’s plans for a merger.
The SEC said in federal court Wednesday that Orlando broke securities rules by issuing false and misleading statements while he led Digital World Acquisition Corp.
Specifically, the SEC alleged that Orlando lied to investors when he said his special purpose acquisition company didn’t have any specific target companies in mind before offering shares to investors.
Keeping Quiet
Special purpose acquisition companies, or SPACs, raise money from public offerings with the goal of buying an existing firm. Under the rules governing such deals, a blank-check company can say what kinds of companies it might buy but can’t hold any actual talks until its own IPO is completed.
Instead, the SEC alleged, Orlando “personally engaged in numerous lengthy discussions with representatives of Trump Media & Technology Group Corp.” and had targeted the company for a merger for several months.
TMTG is the parent company of Truth Social, a social media company, and trades under the ticker DJT.
“Orlando carried out this deceptive course of business as part of a scheme to allow him to reap the financial benefit of the DWAC merger and avoid opposition” from the SPAC’s directors.
Prior Settlement
Neither Orlando nor his attorneys immediately responded to requests for comment. Trump himself wasn’t accused of wrongdoing by the agency in the prior case against the company.
In July 2023, the agency sued and settled with DWAC for $18 million over similar allegations of misleading investors. Orlando left his leadership roles with the company in March 2023.
Trump Media began trading in March 2024, nearly two-and-a-half years after the deal was announced in October 2021. Including trading before the merger, the shares have more than doubled this year.
(Updates with allegations in court filing beginning in third paragraph.)
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