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The public listing of former President Donald Trump’s social media company took a fresh blow Monday when the cash-rich shell company merging with Trump’s company disclosed in a regulatory filing that a federal grand jury in New York recently issued subpoenas to the company and its directors.

The grand jury subpoenas were issued within the past week, according to the filing by Digital World Acquisition Corp., a special purpose acquisition company, or SPAC, that announced a merger with Trump Media & Technology Group in October. After the merger, Trump Media would assume Digital World’s listing and trade as a public company.

The disclosure by Digital World is the first indication that federal prosecutors in Manhattan have joined in 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 provide Trump’s company and its social media platform, Truth Social, with up to $1.3-billion in capital, in addition to a stock market listing.

The Securities and Exchange Commission and Financial Industry Regulatory Authority opened investigations within weeks of the merger announcement. Digital World’s filing Monday said the grand jury subpoenas sought information similar to what the SEC had already requested.

The federal grand jury also sought “information regarding Rocket One Capital.” The filing did not disclose what information the grand jury wanted about Rocket One, a venture capital firm in Miami.

In a separate filing, Digital World disclosed that Bruce Garelick had resigned as a director. Garelick is listed in Digital World filings as the chief strategy officer at Rocket One.

Garelick did not immediately respond to a request for comment. The filing did not give a reason for his resignation.

The SEC investigation has focused on whether there were serious discussions between the leadership of Digital World and Trump Media before the SPAC went public in September and why those talks were not disclosed in regulatory filings. SPACs, which raise money to go public in the hopes of finding a merger candidate, 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 securities of Digital World before the merger announcement. There was a big surge in trading of Digital World warrants – a security that gives the holder the right to buy shares at a later date and at a specified price – before the merger announcement.

Trump Media issued a statement in response to Digital World’s disclosure that said it was “focused on reclaiming the American people’s right to free expression.” The company added, “We encourage – and will co-operate with – oversight that supports the SEC’s important mission of protecting retail investors.”

Grand jury subpoenas are typically issued in connection with a potential criminal investigation. A spokesperson for the U.S. attorney in Manhattan, Damian Williams, declined to comment on the grand jury subpoenas issued to Digital World.

Trump Media’s Truth Social, a Twitter-like social media network on which Trump has taken to posting messages and, after a slow start, has begun gathering adherents, especially among conservatives and other supporters of the former president. Trump was banned from Twitter in January 2021 after repeatedly posting messages that claimed the 2020 presidential election was stolen and for not quickly denouncing the Jan. 6 attack on the Capitol building.

Elon Musk, the multi-billionaire entrepreneur who has made an offer to buy Twitter, has said he would permit Trump to return to the much bigger social media platform if he completes his deal. Trump has said he has no intention of returning to Twitter.

But a licensing deal between Trump Media and the former president permits him to post messages of a political nature on Twitter or other social media platforms.

In regulatory filings, Digital World has said Truth Social “exists to provide its users a true free speech platform and avoid cancellation by Big Tech.”

Trump is the chair of Trump Media, a title he is expected to retain if the merger is completed. Devin Nunes, a former Republican congressman from California, is the CEO of Trump Media, which recently moved its corporate office to Naples, Florida.

The parallel investigation by federal prosecutors and securities regulators comes as the clock is ticking down on the Sept. 8 deadline for completing the merger. The proposed merger agreement permits the deadline for the deal being extended to March 8, 2023.

But shareholders in SPACs have become increasingly reluctant to extend the deadlines for completing mergers as the share prices of many SPACs have cratered in recent months.

Shares of Digital World, which closed last week at $27.82, fell more than 10 per cent in early trading Monday. The stock has declined more than 70 per cent from its March peak but remains well above its $10 listing price.

If the merger is not completed, Digital World will have to return the nearly $300-million raised in the IPO to shareholders. The $1-billion that dozens of hedge funds have said they would invest in a completed deal would be cancelled.

The poor performance of SPACs has led to a number of planned mergers being cancelled by agreement of the parties. The proposed deal between Trump Media and Digital World permits the parties to mutually agree to terminate the deal.

This year, Trump Media raised about $15-million in financing from a group of unnamed investors.

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