Trump’s Truth Social Asks Congress to Investigate SEC Over Unfair Merger Delays

Photo of the Truth Social network logo taken on Feb. 21, 2022. (Dado Ruvic/Illustration/Reuters)

Former president Donald Trump’s social media platform Truth Social has asked Congress to investigate the Securities and Exchange Commission (SEC) over its delayed merger alleging “egregious conduct and blatant politicization.”

The parent company for Trump’s Truth Social platform wrote a Feb. 27th letter acquired by Just the News to the GOP-controlled House of Representatives to investigate the SEC for delaying a potential merger with an acquisition firm.

Truth Social was launched last year as an alternative for conservatives to social media platforms like Twitter and Facebook. It then gained millions of users after Apple and Google Android approved its app for use in its stores.

The letter accused regulators of engaging in “egregious conduct and blatant politicization” to postpone the social media platform’s merger plans multiple times since 2021, reported Just the News.

Digital World Acquisition Corp. (DWAC) filed an S4 plan in October 2021 to merge with Trump Media & Technology Group (TMTG), which owns the Truth Social platform. The SEC has been reviewing the proposal since then.

DWAC is a special purpose acquisition company (SPAC) that has raised millions of dollars from investors for Truth Social, but progress has been in limbo for 18 months due to the alleged political actions of federal regulators.

“The SEC has needlessly delayed its review of our proposed merger, causing real and unnecessary financial harm to DWAC investors, roughly 90 percent of whom are small, retail shareholders whom the SEC is chartered to protect,” TMTG said in a previous press statement in September 2022.

“In the interests of simple fairness, the SEC needs to set aside any improper political considerations and bring its review to a swift conclusion.”

TMTG Asks House Republicans to Investigate SEC Political Bias on Merger

Scott Glabe, the general counsel at TMTG, called the SEC’s unexplained delays unwarranted in the letter to the House.

“America’s cherished free speech tradition is under unprecedented attack by Big Tech companies working hand-in-glove with censorious government agencies, powerful media outlets, and well-connected political operatives,” Glabe wrote to the Republican chairmen of the House Judiciary, Oversight, and Financial Service Committees.

“I write to request your urgent assistance in investigating egregious conduct and blatant politicization of the Securities and Exchange Commission,” wrote Glabe.

The TMTG attorney requested that representatives Jim Jordan (R-Ohio), James Comer (R-Ky.), and Patrick McHenry (R-N.C.) to investigate both the delays in approval and the alleged “multiple severe conflicts of interest” among the key regulators, who may be tainted by political loyalties.

In the letter, Glabe highlighted several members of the SEC, including Chairman Gary Gensler, of having bias for previously working as the CFO of Hillary Clinton’s presidential campaign against Trump in 2016.

Glabe further called out potential bias from the Melissa Hodgman, who was the acting director of division of enforcement of the SEC when the review began in 2021.

Hodgeman is married to the disgraced former FBI agent Peter Strzok, who ran the politically biased probe into the alleged collusion between the Trump campaign and Russia during the 2016 election.

“The facts set forth above cannot be squared with the requirement that SEC proceedings be so completely devoid of bias—or the appearance of bias—that every step of the process is vested with ’the very appearance of complete fairness,'” wrote Glabe in the letter.

“It is therefore deeply alarming that SEC has refused to reveal whether Chairman Gensler and Associate Director Hodgman have recused themselves from matters related to TMTG,” he continued.

SEC Refuses to Explain Delays for Merger Review

The social media company’s general counsel explained that TMTG has been cooperating with the SEC and has repeatedly asked for an explanation for the 18-month delay for the merger approval.

The S4 merger between TMTH and DWAC is one of the longest delayed ongoing SPAC cases under review.

“On June 21, 2022, SEC staff member Joshua Shainess informed DWAC’s counsel that the Division of Corporation Finance had ‘indefinitely suspended’ its review of the S-4, without citing any valid legal basis for such suspension,” wrote Glabe.

The “SEC thus failed to provide comments on the S-4 within the customary 30 days. As of today, SEC has still failed to provide substantive feedback on DWAC’s S-4—which was filed more than nine months ago.”

“The S-4 will soon have lingered for longer than the time between SEC filing and SEC effectiveness for any of the 100-plus SPAC transactions that closed in 2022,” he noted.

Glabe said that the SEC’s delays have harmed both efforts to build an alternative to the Big Tech social media giants and have hurt investors’ opportunity to grow the company.

“The obvious bias of SEC leadership irrevocably taints the agency’s ability to conduct an impartial inquiry,” he argued “We therefore seek immediate congressional action to investigate these abuses, ensure documents are preserved, and uphold the rule of law.”

Meanwhile, shares of DWAC rose today after the company announced a new June 8th deadline to complete its merger with Truth Social. The acquisition company’s prior deadline was Mar. 8.

The deadline extension is the third time that DWAC has changed the date due to SEC regulators. This is the third out of four deadline extensions the company is allowed to use.