Donald Trump’s plan to take his nascent media company public has had another setback, as federal prosecutors have issued subpoenas to board members of the firm that was to acquire it en route to an IPO.
Digital World Acquisition Corp., a special-purpose acquisition company (aka a blank-check firm), said in an SEC filing that the subpoenas are part of probes of the company by the Department of Justice and the SEC. The actions “could materially delay, materially impede, or prevent the consummation of the business combination,” the filing warned.
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The initial product of Trump’s ambitions in media and technology is social media platform Truth Social, which has been operating for the past few months but to little effect. It has not drawn users away from other social media platforms, as was its initial intent. Trump was banned by Twitter after his statements and behavior on January 6, 2021, after the assault on the U.S. Capitol.
Trump Media & Technology Group Corp. and Digital World agreed to merge last October, projecting that the transaction would close in the second half of 2022.
Shares in Digital World, the publicly traded vehicle for the Trump deal, declined 9% in morning trading.
Today’s update from the company noted that the federal investigations had been previously disclosed. But last Friday, the company disclosed that it received a grand jury subpoena with “substantially similar requests” to the previous subpoenas.
The focus of the probes, the company said, is Digital World’s due diligence related to the Trump company as well as communications regarding and due diligence of potential targets other than Trump’s firm. Investigators are also looking at “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),” the filing said.
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