Company that bought Trump’s social media app faced subpoena

New York — Shares of Digital World Acquisition Corp fell 10% in morning trading on Monday as the company reported summons and related Investigation It could also delay or halt the acquisition of the maker of Trump’s Truth Social app by the Justice Department and the Securities and Exchange Commission.

The Justice Department’s subpoenas follow an ongoing investigation by the SEC into whether Digital World broke the rules by having enough talks about buying Trump’s company early last year, before Digital World first went public in September. Sold the stock to , a few weeks before its announcement. It would be buying Trump’s company.

Trump’s social media venture began in February as he looked for a new digital platform to rally his supporters and fight Big Tech’s limits on speech, a year after he was banned. Twitter, Facebook And youtube,

Trump Media End Technology Group — which operates the app and was in the process of being acquired by “blank-check” firm Digital World — said in a statement that it would “cooperate with the SEC’s critical mission of protecting retail investors.” supports.”

The new investigation could make it more difficult for Trump to finance his social media company. The company received promises from dozens of investors last year to pump $1 billion into the company, but may not get the cash until the Digital World acquisition is complete.

The stock rose to over $100 in the digital world in October after Trump announced a deal to buy the company. 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 two years.

Such blank check companies are empty corporate entities with no operations, only promising investors that they will buy a business in the future. As such they are allowed to sell stock to the public without the usual regulatory disclosures and delay, but only if they have not prepared potential takeover targets in advance.

Digital World said in a regulatory filing Monday that each member of its board of directors has been subpoenaed by a grand jury in the Southern District of New York. Both the grand jury and the SEC are seeking documents related to the company and others, including sponsors, ARC Global Investments and Miami-based venture capital firm Rocket One Capital.

According to SEC disclosures, some of the sought documents include “due diligence” regarding communications with Trump Media and other potential takeover targets, as well as communications with Digital World’s underwriters and financial advisors.

Digital World also announced on Monday the resignation of one of its board members, Rocket One’s Chief Strategy Officer Bruce Garelick.

Leave a Comment