NEW YORK — The company that plans to buy Donald Trump’s new social media business has revealed a federal grand jury investigation it says could hinder or even prevent its acquisition of the Truth Social app.
Shares of Digital World Acquisition Corp. fell 10% in morning trading on Monday as the company revealed it had received subpoenas from a grand jury in New York.
The Justice Department subpoenas follow an ongoing investigation by the Securities and Exchange Commission into whether Digital World broke the rules by having substantial discussions about buying the company from Trump from the start. of last year before Digital World first sold shares to the public in September, a few weeks before. his announcement that he would buy the company from Trump.
Trump’s social media venture was launched in February as he sought a new digital stage to rally his followers and fight Big Tech’s limits on speech, a year after he was banned from Twitter, Facebook and YouTube.
The Trump Media & Technology Group – which operates the Truth Social app and was being acquired by Digital World – said in a statement it would cooperate with “oversight that supports the SEC’s important mission to protect retail investors.” “.
The new investigation could make it harder for Trump to fund his social media company. Last year, the company received pledges from dozens of investors to inject $1 billion into the business, but it can’t get the money until the Digital World acquisition is complete. .
Digital World shares soared to over $100 in October after news of its agreement to buy the company from Trump. The stock was trading at around $25 in morning trading on Monday.
Digital World is a special purpose acquisition company, or SPAC, part of an investment phenomenon that has exploded in popularity over the past couple of years.
These “blank check” corporations are empty corporations with no operations, only offering investors the promise that they will buy a business in the future. As such, they are permitted to quickly sell shares to the public without the usual regulatory disclosures and delays, but only if they have not already lined up potential acquisition targets.
Digital World said in a regulatory filing on Monday that each member of its board of directors had been subpoenaed by the grand jury for the Southern District of New York. The grand jury and SEC are also seeking a number of documents related to the company and others, including a sponsor, ARC Global Investments, and Miami-based venture capital firm Rocket One Capital.
Some of the documents sought involve “due diligence” regarding Trump Media and other potential acquisition targets, as well as communications with Digital World’s underwriter and financial advisor in connection with its initial public offering, according to the disclosure. DRY.
Digital World also announced on Monday the resignation of one of its board members, Bruce Garelick, chief strategy officer at Rocket One.