Business information

Advisors to Trump’s media deal partners reprimanded by SEC

October 29 (Reuters) – Donald Trump’s social media partner took advice from a group of China-based businessmen who in the past have tried their hand at businesses ranging from Spanish wine to Spanish wine. Korean women’s fashion, and at one point their “integrity” was called into question by US regulators.

The financiers – Abraham Cinta, Sergio Camarero, Carlos Lopez and Jesus Emilio Hoyos Quintero – are the managing partners of ARC Group Ltd, a Shanghai-based investment bank listed in a regulatory filing as a financial advisor to Digital World Acquisition Corp (DWAC.O), the front company merging with the company of the former US president.

The Managing Director of Digital World is Patrick Orlando, who has acted as the public face of the Special Purpose Acquisition Company (SPAC). Digital World featured ARC on a dossier as an advisor who had connections in the worlds of government, business, investment and consulting and would help them “gain access to a pipeline of quality deals “.

A review of regulatory records shows that while the CRA was actively involved in the creation of PSPC, particularly over the past two years, its officers have had issues with the United States Securities and Exchange Commission (SEC) in 2017. The regulator filed a lawsuit to block the initial public offerings of three companies where the four men had prominent roles, accusing them of distorting their relationships, of distorting the nature and scope of their activities and not to cooperate with regulators.

Executives did not appear at the hearings and a judge issued a default judgment in favor of the regulator, according to regulatory documents. The result was a rare so-called stop order, which prohibited executives from going public with their companies – Go EZ Corp, Arc Lifestyle Group Inc and Nova Smart Solutions Inc.

Go EZ sold smartphone accessories, Arc Lifestyle sold products such as designer clothes, Spanish wine, and olive oil, and Nova’s activities included drone development and a staffing service. personnel, depending on the record.

The respondents are in default for failing to file a response, appear at the hearing or otherwise defend the proceedings, “wrote Cameron Elliot, an administrative law judge for the SEC at the time. Their actions” call into question. management integrity issue “.

Elliot, who is now an administrative judge at the United States International Trade Commission, told Reuters he had no further information on the case.

Camarero, one of the managing partners of the ARC group, was CEO of Nova Smart. In an email to Reuters, he said he cooperated with regulators, taking their calls and providing them with his email communications. But when they asked him to fly to Washington, he couldn’t for “personal and professional reasons.”

“The process was getting very difficult and taking my time,” he wrote in an email. He said he decided to try to run the business privately, but ultimately had to wind it up.

“Obviously I was collateral damage,” he said.

In the ruling, the judge noted that Camarero made documents available and participated in phone calls, but refused to testify in the United States.

Cinta, Arc Group CEO, Lopez and Quintero did not respond to requests for comment. An SEC spokesperson also did not respond to a request for comment.

Reuters could not determine what Trump or his company, Trump Media & Technology Group, knew about the involvement of ARC Group bankers in Digital World or their past issues with regulators.

Trump Media & Technology Group and Digital World did not respond to requests for comment. Orlando, who has worked on at least three other special purpose acquisition companies with ARC, also did not respond to requests for comment.

Arrest orders, such as those against RCAF cadres, are extremely rare; only five have been issued by the SEC since the case against the CRA executives four years ago.

Christina Thoma, a partner at law firm Mayer Brown LLP and a former senior adviser to the SEC who was not involved in the Trump SPAC deal, called the stop order “extreme.”

“Most enforcement actions brought against companies for disclosing materially false or misleading information do not result in a stop order because the SEC has the ability to seek different penalties,” she said. .

Perrie Weiner, a securities litigation attorney at Baker McKenzie, said the ruling could become a problem if executives were the subject of another SEC investigation or legal action by investors.

However, Weiner noted that the judgment against the four negotiators was not a finding of fact. “It’s as if you suffered a moving violation and didn’t show up to your hearing, and they passed judgment against you for non-appearance and non-cooperation.”

GLOBAL EXPANSION

Regulatory briefs and investor presentations prepared by the ARC Group show that the company has thrived in recent years, helping clients overcome the barriers to investing in the United States that Trump has erected for Chinese investors.

It has grown from one to 15 offices worldwide, realizing $ 1.8 billion in transactions, according to its website. The firm also said it has created and advised more than 30 PSPCs, the vast majority of which are in the United States, according to an investor presentation.

Digital World shares have risen more than 600% since the deal a week ago, and the ARC Group used the rally to promote its business in China. He sent a Mandarin translation of a Reuters article on the merger to subscribers on his channel on Chinese messaging app WeChat last week.

“Trump’s company merges with our SPAC, stocks jumped 400%!” he wrote.

Reporting by Echo Wang in Las Vegas and Krystal Hu in New York Editing by Greg Roumeliotis and Edward Tobin


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