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By Flynn Nicholls
US News Reporter
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The former chief executive of the company that helped Donald Trump's social media company go public is being sued for securities fraud.
The U.S. Securities and Exchange Commission (SEC) has accused Patrick Orlando, former CEO of shell company Digital World Acquisition Corp, of breaking rules by issuing false and misleading statements.
In its filing with a District of Columbia court on Wednesday, the SEC said Orlando had failed to disclose to investors that DWAC had formed a plan to acquire Trump Media & Technology Corp.
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The SEC's complaint alleges that Orlando, in his capacity as chief executive and chairman of Digital World, falsely represented that the company had no prior discussions or contacts with potential merger targets.
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The SEC alleges that Orlando had in fact engaged in numerous discussions with "representatives of Trump Media" and had targeted it for a merger for months. The SEC contends that these actions constitute fraudulent conduct and materially false statements in filings made with the Commission.
The SEC launched its investigation in December 2021, after reports that Orlando personally met with Former President Donald Trump without informing Digital World investors he intended to initiate the merger.
Newsweek has contacted Orlando and Trump Media for comment outside business hours.
The merger was finalized in March, ending the shell company's controversial multiyear bid to take Trump's social media firm public.
Last July, Digital World faced an $18 million penalty as part of its settlement with the SEC over the fraud allegations related to those dealings.
Similarly to the charges Orlando now personally faces, the SEC accused Digital World of making material misrepresentations to its investors by not disclosing its plans to acquire Trump Media. The SEC also alleged that the shell company mischaracterized and omitted information about its interactions with Trump Media in its filings.
Orlando left his leadership roles with Digital World in March 2023, but the saga appears to have continued to impact the market. Shares of Digital World swung wildly in March 2024, ahead of shareholder vote on the merger. The vote passed and Digital World was rebranded as Trump Media & Technology Group Corp., giving Trump a substantial stake valued in the billions of dollars.
In recent developments, shares of Trump Media, now trading under the ticker "DJT," have experienced significant volatility. Experts have previously told Newsweek that it performs on the market as a "meme stock", meaning a stock that it is popularized on social media and purchased by inexperienced investors due to its association with the Trump brand.
Since its peak in March, its value has declined, causing substantial losses to Trump's portfolio.
However, this week, following the assassination attempt on Trump at a rally in Pennsylvania, the stock jumped more than 60 percent in premarket trading, still about 50 percent below its market peak.
Trump launched Truth Social in February 2021, to "stand up to the tyranny of Big Tech" after he was banned from Twitter and Facebook in relation to the January 6 Capitol Riot. He has since been reinstated to those platforms but continues to use Truth Social.
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