Rep. Devin Nunes, a Republican from California and a top ally of former President Donald Trump, announced on Monday that he is resigning from Congress to become the new chief executive of Trump Media in January.
Nunes, the former chair of the House Intelligence Committee, was an ardent backer of Trump’s during probes into Russian meddling in the 2016 election and the president’s 2019 impeachment by the Democratic-led House.
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Digital World Acquisition Corp (NASDAQ: DWAC), the company merging with Trump’s new media venture, said Monday that it is cooperating with “the preliminary, fact-finding inquiries” by the Securities and Exchange Commission and the Financial Industry Regulatory Authority.
Trump dismissed the request for documents as a political attack on him.
“You know, this is just a continuation of witch hunts,” he said Monday night on the conservative network Newsmax. “Anything you do they want to look at it.”
The SEC early last month requested documents related to meetings of DWAC’s board and communications between DWAC and Trump’s media venture, among other things. According to DWAC, the SEC’s request said the commission’s “investigation does not mean that the SEC has concluded that anyone violated the law or that the SEC has a negative opinion of DWAC or any person, event, or security.”
The SEC could be looking at whether DWAC and Trump’s company had any conversations about a deal before DWAC’s own initial public offering of stock, said Jay Ritter, a professor at the University of Florida who is an expert on IPOs.
Critics say Sen. Elizabeth Warren’s Nov. 17 letter to the SEC’s chair, Gary Gensler, asking if the agency is exploring whether DWAC had violated the law by holding such discussions and misleading potential investors by failing to inform them before its IPO, is proof that the probe is politically motivated.
Asked how worried he would be about the SEC’s investigation if he were on the receiving end, Ritter said, “It depends on what I knew. This could be innocuous or Pro-forma stuff, or it could be really serious.”
Just what the regulators are probing is not clear. What’s more, the regulatory rules on SPAC discussions with targets are gray, prohibiting only “substantive” talks with possible acquisition targets.
The merger announcement sent DWAC’s stock surging from $9.96 to $94.20 in just two days as Trump supporters and investors looking to make a fast buck piled in. The shares have since pulled back to roughly $44. On Monday, the shares closed down 2.6% at $43.81.
Such a lofty price indicates high expectations for Trump’s media venture among at least some investors. In its filing with regulators, DWAC also gave some financial forecasts for the company, which has yet to launch but wants to build a “non-cancellable” global community.
The presentation included forecasts that the company’s TRUTH Social service may have 81 million users worldwide by 2026.
SPACs generally are known for giving very optimistic forecasts about their future growth in presentations to investors.
For its TMTG+ video service that will stream “non-woke” entertainment and news, it says the monthly fee per user could be $9 in 2026. Netflix, in comparison, got $14.49 in average revenue from its U.S. and Canadian members during the first nine months of this year.
In the statement announcing his appointment as CEO, Nunes said, “The time has come to reopen the Internet and allow for the free flow of ideas and expression without censorship.”
The Associated Press contributed to this article