Former CEO of Digital World Acquisition Corp., Patrick Orlando, is facing a lawsuit filed by the U.S. Securities and Exchange Commission (SEC) for allegedly making false statements about the company’s plans to merge with Trump Media. The SEC claims that Orlando violated securities rules by issuing misleading statements while leading the company. The agency alleges that Orlando failed to disclose that Digital World had formulated a plan to acquire Trump Media and was actively pursuing the acquisition even before its initial public offering.
The SEC specifically accuses Orlando of falsely stating that Digital World had not contacted any merger targets and had no merger plans. According to the SEC filing, Orlando knew these statements were false as he had engaged in numerous discussions with representatives from Trump Media and had been targeting the firm for several months. The SEC is seeking a permanent injunction against Orlando, as well as disgorgement of ill-gotten gains, pre-judgment interest, and civil penalties.
Earlier this year, Digital World completed its merger with Trump Media, with former President Trump holding a majority of the company’s shares as it went public on the Nasdaq. However, the company had previously settled regulatory charges of “material misrepresentations” to investors in July of last year. The SEC had accused Digital World of violating antifraud provisions of federal securities laws. The company agreed to a cease-and-desist order and a penalty of $18 million if the merger closed.
Since Trump Media’s public listing, the company’s stock has experienced significant fluctuations. After its debut in March, the stock surged to over $66, but by mid-June, it dropped to around $26. However, following the attempted assassination of former President Trump at a rally in Pennsylvania, the stock price rose from around $30 on July 12 to $40 on July 15.
Trump Media CEO Devin Nunes expressed his condolences to those affected by the incident and called for a federal investigation. He also requested additional security resources for President Trump’s safety. In a May earnings filing, Trump Media reported a net loss of $327.6 million and total revenue of $770,500 for the first quarter. The company also stated that any disagreement with President Trump regarding his obligation to use Truth Social could have a material adverse effect on its business and operations.
The SEC’s lawsuit against Patrick Orlando highlights the importance of transparency and accurate disclosure in the financial industry. It serves as a reminder to companies and executives to uphold ethical standards and provide truthful information to investors. The fluctuations in Trump Media’s stock price demonstrate the influence of external events, such as the attempted assassination, on investor sentiment and market performance. It also emphasizes the need for companies to address security concerns promptly and ensure the safety of their key figures.
Overall, this case raises questions about the integrity of corporate leadership and the potential consequences of misleading statements. Investors should remain vigilant and conduct thorough due diligence before making investment decisions. It is crucial for regulatory bodies like the SEC to take action against individuals who engage in fraudulent practices to protect the interests of investors and maintain the integrity of the financial markets.
