The so-called “blank check” company behind former president Donald Trump’s Truth Social platform now appears to be the subject of an investigation by federal prosecutors who are looking into whether the company or its executives violated federal securities laws. Shares of the Special Purpose Acquisition Company, known as Digital World Acquisition Corporation, fell nine percent in early trading on Monday after CEO Patrick Orlando filed a statement with the Securities and Exchange Commission to report that the company, which is pursuing a merger with the former president’s Trump Media and Technology Group, was issued a subpoena by a federal grand jury in the Southern District of New York.
Mr Orlando also wrote that each member of DWAC’s board of directors has also been issued a subpoena by the same grand jury. The grand jury subpoenas, he said, appear to be “seeking various documents and information” that are substantially similar to subpoenas issued to the company by the SEC earlier this year, as well as documents relating to the company’s previous SEC filings, “communications with or about multiple individuals, and information regarding Rocket One Capital,” a venture capital and private equity firm. The US securities regulator is probing whether DWAC executives violated laws which ban negotiations between the company and Mr Trump’s tech firm before DWAC went public in late 2021. After Mr Trump announced his company’s pending deal with DWAC, shares in the public company skyrocketed by over 400 per cent.
A previous filing by Mr Orlando stated that the SEC subpoena sought documents concerning “among other things, Digital World’s due diligence regarding TMTG, communications regarding and due diligence of potential targets other than TMTG, relationships between and among Digital World (and/or certain of Digital World’s officers and directors) and other entities (including ARC Global Investments II LLC, Digital World’s sponsor, and certain advisors, including Digital World’s underwriter and financial advisor in its initial public offering).” Additionally, the pending merger is also the subject of an investigation by the Financial Industry Regulatory Authority, a commercial entity that acts as a self-regulator for brokerage firms and securities exchange markets.
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