The public listing of former President Donald J. Trump’s social media company received a new blow Monday when the cash-rich fictitious company merged with Mr. Donald J. Trump’s company. Trump revealed in a regulatory document that a grand federal jury in New York recently issued subpoenas to the company and its executives.
Grand jury citations were issued last week, according to the presentation of Digital World Acquisition Corporation, a special-purpose acquisition company, or SPAC, which announced a merger with Trump Media & Technology Group in October. Following the merger, Trump Media would take over Digital World’s listing and trade as a public company.
The revelation of Digital World is the first indication that Manhattan federal prosecutors 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 would bring the Trump company up to $ 1.3 billion in capital, in addition to a stock market listing.
The Securities and Exchange Commission and the Financial Industry Regulatory Authority opened investigations a few weeks after the announcement of the merger. The Digital World presentation on Monday said the grand jury citations sought information similar to what the SEC had already requested.
The grand federal jury also sought “information about Rocket One Capital.” The presentation did not reveal what information the grand jury wanted about Rocket One, which is a venture capital firm in Miami.
In a separate document, Digital World revealed that Bruce Garelick had resigned as director. Mr. Garelick is on Digital World’s list of documents as Rocket One’s director of strategy.
Mr. Garelick did not immediately respond to the request for comment. The file did not give the reason for his resignation.
The SEC’s investigation has focused on whether there were serious discussions between Digital World’s leadership and Trump Media before the SPAC was made public last September and those talks were not revealed in regulatory documents. SPACs, which raise money to go public with the hope of finding a merger candidate, are not supposed to have an acquisition goal in mind when they raised money from investors.
Regulators also asked for information about Digital World’s unusual stock trading activity ahead of the announcement of the merger. Prior to the announcement of the merger, there was a large increase in Digital World’s warrants trading, a value that gives the holder the right to buy shares at a later date and at a specified price.
Trump Media issued a statement in response to Digital World’s disclosure that said it was “focused on claiming the right of the American people to free speech.” The company added: “We encourage – and will cooperate with – oversight that supports the SEC’s important mission of protecting retail investors.”
Trump Media’s flagship product is Social Truth, a Twitter-like social media clone in which Mr. Trump has begun posting messages and, after a slow start, has begun gathering supporters, especially among conservatives and other supporters of the former president. Mr. Trump was ousted from Twitter in January 2021 after repeatedly posting messages claiming that the 2020 presidential election was stolen and for not quickly denouncing the January 6 attack on the Capitol building.
Shares of Digital World, which closed at $ 27.82 last week, fell more than 10 percent in pre-market trading. Shares have fallen more than 70 percent from the March high, but remain well above their share price.