Truth Social investigation: Co-founder claims Trump's media company violated federal securities law

There is more potential legal trouble for former President Trump, as sources tell ABC News the SEC and federal prosecutors in New York are investigating claims by a co-founder that Trump's media company violated federal securities law.

An insider is claiming Truth Social isn't telling the truth to its investors.

Federal regulators are pouring over a complaint by a former executive at Truth Social's parent company, alleging Trump Media & Technology Group violated securities laws.

"It's serious. It's not a good idea to be on the wrong side of a securities law violation," said Michael Klausner, a law professor at Stanford University.

Truth Social was meant to be a post-presidency business opportunity and a way for Trump to get back on social media after Twitter shut him out because of January 6.

The co-founder told the Washington Post that the former president asked one executive to relinquish his shares in the company to former First Lady Melania Trump and had him removed from the board of directors when he refused.

The complaint also said Trump Media tried to raise capital by making fraudulent misrepresentations about the company's finances.

"Ultimately, with respect again to the securities laws, this would all have to be disclosed," Klausner said.

Sources tell ABC News that the Securities and Exchange Commission is investigating, as are federal prosecutors in New York. However, there has been no comment from either.

In a statement provided to ABC News, Trump Media touted its successes and said the whistleblower's account is "rife with knowingly false and defamatory statements and other concocted psychodrama."