Patrick Orlando, the former Chief Executive Officer of Digital World Acquisition Corp. (DWAC), has been charged with securities fraud by the U.S. Securities and Exchange Commission. The charges relate to Orlando’s role in taking former President Donald Trump’s Trump Media & Technology Group (NASDAQ: DJT) public through a special purpose acquisition company.
According to the complaint filed by the SEC in the District of Columbia on Wednesday, Orlando is accused of making “fraudulent conduct and materially false and misleading statements” in official filings. The SEC alleges that Orlando misled investors by falsely stating that DWAC had no discussions or plans to merge with any specific company, while in reality, he had been in extensive negotiations with TMTG, the parent company of the social media platform Truth Social.
The SEC’s complaint highlights that Orlando and DWAC had targeted TMTG for a merger for several months before DWAC’s initial public offering. The SEC claims that these undisclosed plans constituted a serious violation of federal securities laws.
The investigation into Orlando’s actions began in December 2021 after reports surfaced that he had met with former President Donald Trump to discuss the merger without informing DWAC investors. The merger was completed in March 2024, finalizing the controversial move to take Trump’s social media company public.
In July 2023, DWAC faced regulatory charges for making “material misrepresentations” to investors, leading to an $18 million penalty as part of a settlement with the SEC. The company agreed to a cease-and-desist order concerning these violations.
Orlando stepped down from his leadership roles at DWAC in March 2023, but the fallout from the SEC’s ongoing scrutiny has continued to affect the market. Shares of the newly rebranded Trump Media & Technology Group Corp. trading under the ticker “DJT” have experienced significant volatility.
Market analysts have described TMTG as a “meme stock,” a term used to refer to stocks popularized on social media and often driven by inexperienced investors. Despite an initial surge, the stock’s value has declined since its peak in March 2024.
Interestingly, the stock saw a substantial jump of over 60% earlier this week following an assassination attempt on Trump at a rally in Pennsylvania, although it remains about 50% below its peak value.
The SEC’s charges against Orlando underscore the broader regulatory concerns surrounding SPACs and their transparency to investors. Legal experts suggest that this case could set a precedent for how regulatory bodies handle similar cases in the future.
Trump Media last traded at $35.96 on the NASDAQ.
Information for this briefing was found via Reuters, Newsweek and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
