Sen. Elizabeth Warren on Thursday asked the Securities and Exchange Commission to investigate possible securities violations in a planned SPAC deal involving former President Donald Trump’s new social media platform.

Warren, a Massachusetts Democrat, in a letter to SEC Chairman Gary Gensler noted recent news reports that Digital World Acquisition Corp., which last month announced plans to merge with Trump’s company, “may have committed securities violations by holding private and undisclosed discussions about the merger as early as May 2021, while omitting this information [SEC) filing and other public statements.”

Warren also wrote, “The reports about DWAC and Trump Media and Technology Group appear to be a textbook example of a SPAC misleading shareholders and the public about materially important
information.”

She said that the omission resulted in “enriching big investors” in DWAC,” including a number of hedge funds, whose shares exploded in value after the merger was announced, “while trapping retail investors in a stock bubble.” At least four hedge funds D.E. Shaw, Lighthouse Investment Partners, ATW Spac Management, and Saba Capital, sold their unrestricted shares after the deal was announced.

Warren noted in the first week of trading following the merger news, DWAC’s shares rose by as much as 1,657%, but eventually fell back from $175 per share to $56.50 per share.

And as of Tuesday, she wrote, the share price was just under $60 “leaving the transaction looking suspiciously like a scheme in which ‘the salesmen behind all of this should be fine, even if those who fall for their sales pitch get screwed,’ ” Warren wrote, quoting a line from a Forbes article entitled, “Trump’s SPAC Is Screwing His Own Supporters While Enriching Wall Street Elites.”

The SEC did not immediately respond to CNBC’s request for comment about Warren’s letter.

So-called special purpose acquisition companies such as DWAC are created to raise capital in public equity markets with the goal of purchasing or merging with private firms.

Trump Media & Technology Group last month said it had entered into a merger agreement with DWAC that would end with Trump’s company becoming a publicly listed company, subject to regulatory and stockholder approval.”

Warren’s letter to the SEC cited an Oct. 29 article in The New York Times, which carried the headline, “Trump’s $300 Million SPAC Deal May Have Skirted Securities Laws.”

That article, citing sources, reported that DWAC’s chief Patrick Orlando “had been discussing a deal with Mr. Trump since at least March,” months before shares in that began trading on the Nasdaq in September.

The Times noted that SPACs are not supposed to have mergers planned when at the time of their initial public offerings.

Warren’s letter referred to the Securities Act of 1933, which bars false statements or failing to state a material fact in the sale of a security.

She said that under that law, “SPACs are required to disclose any direct or indirect conversations with potential target companies, protecting both the early investors and retail investors joining at the initial public offering.”

“But DWAC and Trump Media and Technology Group appear to have brazenly flouted these
rules,” Warren wrote.

“DWAC indicated in numerous SEC filings between May 25, 2021 and September 8, 2021 that the organization stated, ‘[w]e have not selected any specific business combination target and
we have not, nor has anyone on our behalf, initiated any substantive discussions, directly or
indirectly, with any business combination target.’ “

Trump at the same time that the merger was announced said that would roll out a platform called “TRUTH Social,” which he claimed will “stand up to the tyranny of Big Tech.”

The Republican ex-president was banned by social media giants Twitter and Facebook earlier this year after accusations he incited the Jan. 6 Capitol riot by his supporters.

– Additional reporting by CNBC’s Thomas Franck