The public listing of former President Donald J. Trump’s social media company took a fresh blow on Monday when the shell company, rich in cash, merged with Mr. Trump’s company. It was disclosed in an organizational file That a federal grand jury in New York recently issued subpoenas for the company and its directors.
Subpoenas have been issued to the grand jury over the past week, according to a filing by Digital World Acquisition, a special purpose acquisition company, or SPAC, which announced its merger with Trump Media & Technology Group in October. After the merger, Trump Media took over Digital World’s listing and trading as a public company.
The Digital World disclosure is the first indication that federal prosecutors in Manhattan have joined the examination of the merger between Digital World and Trump Media, which has been under investigation by financial regulators for months. The investigation threatens to further delay the completion of the merger, which will provide Trump’s company and its social media platform, Truth Social, with up to $1.3 billion in capital, as well as a stock market listing.
The Securities and Exchange Commission and the Financial Industry Regulatory Authority open investigations Within weeks of the merger announcement. The Digital World filing said Monday that grand jury subpoenas requested information similar to what the Securities and Exchange Commission had already requested.
The federal grand jury also requested “information relating to Rocket One Capital.” The filing did not reveal the information the grand jury wanted about Rocket One, a Miami-based venture capital firm.
in separate depositDigital World has revealed that Bruce Garelick has resigned as a Director. Mr. Garelick is listed on Digital World’s files as Chief Strategy Officer at Rocket One.
Garlick did not immediately respond to a request for comment. He did not mention in the lawsuit the reason for his resignation.
The SEC . investigation Focus on whether and why there were serious discussions between the leadership of Digital World and Trump Media before SPAC came to the public in September These conversations were not disclosed in regulatory filings. SPACs, which raise money for an IPO in hopes of finding a candidate for a merger, are not supposed to have an acquisition objective in mind when they raise money from investors.
Regulators also requested information about unusual trading activity in Digital World’s securities prior to announcing the merger. there It was a big boom in trading Digital World warrants – a security that gives its holder the right to buy shares at a later date and at a specified price – before the merger is announced.
Trump Media released a statement in response to Digital World’s revelation that it was “focused on restoring the American people’s right to free speech.” “We encourage – and will cooperate – with oversight that supports the SEC’s important mission to protect retail investors,” the company added.
Subpoenas are usually issued to a grand jury in connection with a potential criminal investigation. A spokesman for the US Attorney in Manhattan, Damian Williams, declined to comment on the grand jury’s subpoenas to Digital World.
Trump Media Truth Social, a Twitter-like social media clone that Mr. Trump used to post messages on him and after slow start, began to gather his supporters, especially among conservatives and other supporters of the former president. Mr Trump was Banned from tweeting In January 2021 after publishing repeated messages alleging that the 2020 presidential election had been stolen and for failing to condemn the January 6 attack on the Capitol.
Elon Musk, billionaire businessman Who made an offer to buy TwitterHe said he would allow Mr. Trump to return to the much larger social media platform if he completed his deal. Mr. Trump said he has no intention of returning to Twitter.
But the licensing deal between Trump Media and the former president allows him to publish messages of a political nature On Twitter or other social media platforms.
In the regulatory filings, Digital World said Truth Social “exists to provide its users with a true platform for freedom of expression and to avoid revocation by Big Tech.”
Mr. Trump is President Trump Media, a title he is expected to retain if the merger is completed. Devin Nunes, a former Republican congressman from California, is the CEO of Trump Media, which recently moved its office to Sarasota, Florida.
According to Digital World filings, it does not appear that anyone associated with Trump Media has received any subpoenas.
It is unclear how the Rocket One Capital missile was involved in the investigation. The venture capital firm is led by Michael Schwarzman, who did not respond to requests for comment. Shortly after Digital World revealed the subpoena to a grand jury, Rocket One canceled much of it General location.
The parallel investigation by federal prosecutors and securities regulators comes as the clock approaches the September 8 deadline for completing the merger. The proposed merger agreement would allow the deal deadline to be extended until March 8, 2023.
But the contributors to SPACs are becoming increasingly reluctant to extend deadlines for completing mergers as share prices of many SPAC companies have plummeted in recent months.
Shares of Digital World, which closed last week at $27.82, fell more than 10 percent in early trading Monday. The stock is down more than 70 percent from its March peak, but is still well above the $10 listing price.
If the merger is not completed, Digital World will have to return nearly $300 million raised in the IPO to shareholders. The $1 billion that dozens of hedge funds said they would invest in the completed deal will be cancelled.
The poor performance of the SPACs has resulted in the cancellation of a number of planned mergers with the consent of the parties. The proposed deal between Trump Media and Digital World would allow the parties to mutually agree to terminate the deal.
Earlier this year, Trump Media raised about $15 million in funding from a group of unnamed investors.
Kitty Bennett Contribute to research.
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