Former US President Donald Trump applauds at the National Rifle Association (NRA) Annual Meeting on May 27, 2022 in Houston, Texas, USA.
Shannon Stapleton | Reuters
Federal criminal investigations threaten a merger between former President Donald Trump’s social media company and a special-purpose acquisition company. This is a transaction that gives the merged company access to billions of dollars in the public market.
That company, Digital World Acquisition Corp.. Obviously Securities to be submitted on Monday On June 16th, I noticed that each member of the board received a subpoena from a federal grand jury in New York.
The grand jury wants a document similar to what the Securities and Exchange Commission had sought in a civil investigation already disclosed, DWAC said. The company itself received a subpoena on Friday with similar requests, as well as other requests related to communications, individuals, and information related to Rocket One Capital.
DWAC also revealed on Monday that board member Bruce J. Garelick had informed management that he would resign from the board last Wednesday. “It wasn’t the result of a disagreement over the operation, policies and practices of Digital World,” Galerick said, according to the company’s filings.
Garelick is listed as Chief Strategy Officer of RocketOne Capital. He didn’t immediately respond to CNBC’s request for comment. The Rocket One website is virtually blank on Monday morning, saying, “The site will be available soon. Please wait!”
The DWAC warned that subpoenas and investigations by the SEC and the US Department of Justice could delay or even prevent Trump’s merger with social media companies. The company’s share price fell more than 8% to about $ 25 on Monday morning. After the announcement of a deal with Mr. Trump’s group, stock prices soared above $ 90 in October.
DWAC did not immediately respond to the request for comment.
Development is the latest political headache for Trump. Evidence presented at a hearing held by the House Commission investigating January 6, 2021, is increasing Protrump’s attack on the former president’s alleged role in planning to overturn the outcome of the 2020 elections. It is being scrutinized. He is also considering participating in the 2024 White House race.
Trump Media & Technology Group announced in October that it had agreed to merge with DWAC with the ultimate goal of becoming a listed company subject to regulatory and shareholder approval.The merger was with Trump’s company Its social media platform, Truth SocialListed on its own stock market with over $ 1 billion in capital. DWAC’s share soars At that time.
Trump Media did not immediately respond to the request for comment.
The company is headed by former Republican Rep. Devinneness, who was one of Trump’s most loyal defenders in Congress. Trump Media’s Truth Social has already been launched. The former president continued to push the false story that the election was stolen from him, so he founded it as an alternative to Twitter, which banned him in a tweet on January 6.
This disclosure presents the latest issue with SPAC, a type of shell company established to raise capital in the public stock market with the ultimate goal of acquiring or merging private companies.
The planned partnership between Truth Social and DWAC ran into problems from the beginning.
One of the first criticisms was Senator Elizabeth Warren, D-Mass. In November, the DWAC told SEC Chair Gary Gensler that he may have committed a securities breach by having a private, private discussion of the merger as early as May 2021. Insisted.This information is [SEC] Filing and other official statements. “
DWAC’s share lost more than half of its value in 2022. This is far worse than the poor performance of the wider market this year. S & P 500 It decreased by about 18% during the same period.
— CNBC Thomas Frank Contributed to this article.
