By Associated Press | Updated: 28 June 2022
The company planning to buy Donald Trump’s new social media business has disclosed a federal grand jury investigation that, it says, could impede or even prevent its acquisition of the Truth Social app.
Shares of Digital World Acquisition dropped 10 percent in morning trading on 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, just weeks before its announcement that it would be buying Trump’s company.
The company planning to buy Donald Trump’s new social media business has disclosed a federal grand jury investigation that, it says, could impede or even prevent its acquisition of the Truth Social app.
Shares of Digital World Acquisition dropped 10 percent in morning trading on 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, just weeks before its announcement that it would be buying Trump’s company.
Stock in Digital World rocketed to more than $100 (nearly Rs. 7,800) in October after its deal to buy Trump’s company was announced. The stock traded at just around $25 (nearly Rs. 2,000) in morning trading on Monday.
Digital World is a special-purpose acquisition company, or SPAC, part of an investing phenomenon that exploded 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 and delays, but only if they haven’t already lined up possible acquisition targets.
Digital World said in a regulatory filing on Monday that each member of its board of directors has been subpoenaed by the grand jury in the Southern District of New York. 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.
