Trump’s social network deal under the supervision of the grand jury

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.

Grand jury subpoenas have been issued over the past week, according to a filing by Digital World Acquisition Corporation, 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 scrutiny 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 Mr. Trump’s company with up to $ 1.3 billion in capital, as well as its listing on the stock market.

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.

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Garlick did not immediately respond to a request for comment. He did not mention in the lawsuit the reason for his resignation.

The SEC’s investigation focused on whether there were serious discussions between the Digital World leadership and Trump Media before SPAC went public last September and those 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 target 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 was a big boom in the trading of Digital World collateral – a security that gives its holder the right to buy shares at a later date and at a specified price – before the merger was 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.

Trump Media’s flagship product is Truth Social, a Twitter-like social media clone that Mr. slow start, he began to gather his supporters, especially among conservatives and other supporters of the former president. Mr Trump was banned from twitter 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.

Shares of Digital World, which closed last week at $27.82, fell more than 10 percent in pre-market trading. The stock is down more than 70 percent from its March peak, but is still well above its listing price.

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