Companies planning to acquire Donald Trump's new social media business could interfere with or prevent the acquisition ofTruth Social. Disclosure of the Federal Grand Jury's investigation mentioned. app.
Shares of Digital World Acquisition Corp. dropped 10% in midday trading Monday as the company revealed that it has received subpoenas from a grand jury in New York.
The Justice Department subpoenas follow an ongoing probe by the Securities and Exchange Commission into whether Digital World broke rules by having substantial talks about buying Trump's company starting early last year before Digital World sold stock to the public for the first time in September
Trump's social media venture , launched in February, gathered supporters a year after being banished from Twitter to limit big tech remarks. Looking for a new digital stage to fight against. Facebook and YouTube.
Trump Media & Technology Group, which operates the Truth Social appand is in the process of being acquired by Digital World, is "surveillance" in a statement. He says he will cooperate. It supports the SEC's important mission of protecting private investors.
The new probe could make it more difficult for Trump to finance his social media company. The company last year got promises from dozens of investors to pump $ 1 billion into the company, but it can't get the cash until the Digital World acquisition is completed.
Stock in Digital World rocketed to more than $ 100 in October after its deal to buy Trump's company was announced. The stock traded at just around $ 25 in morning trading Monday.
Digital World is a special-purpose acquisition company, or SPAC, part of an investing phenomenon that excited in popularity over the past two years.
Such “blank-check” companies are empty corporate entities with no operations, only offering investors the promise they will buy a business in the future. As such they are allowed to sell stock to the public quickly without the usual regulatory disclosures an d delays, but only if they haven't already lined up possible acquisition targets.
Digital World said in a regulatory filing Monday that each member of its board of directors has been subpoenaed by the grand jury in the Southern District Both the grand jury and the SEC are also seeking a number of documents tied to the company and others including a sponsor, ARC Global Investments, and Miami-based venture capital firm Rocket One Capital.
Some of the sought documents involve “due diligence” regarding Trump Media and other potential acquisition targets, as well as communications with Digital World's underwriter and financial adviser in its initial public offering, according to the SEC disclosure.
Digital World also Monday announced the resignation of one of its board members, Bruce Garelick, a chief strategy officer at Rocket One.