Trump Social Media Firm Subpoened 07/02 08:35
NEW YORK (AP) -- Donald Trump's social media company and some of its
employees received subpoenas from both a federal grand jury and securities
regulators, according to a public disclosure Friday, possibly delaying or even
killing a deal promising a cash infusion needed to take on Twitter.
Trump Media & Technology Group received subpoenas from a grand jury in New
York and the Securities and Exchange Commission, according to a securities
document filed by Digital World Acquisition Corp. on Friday. Digital World has
plans to buy Trump Media, releasing $1.3 billion for its fledging business, but
the deal is unlikely to be done during two legal probes.
Trump, who is Trump Media's chairman, was not among the employees who
received subpoenas, according to a Trump Media statement.
On Monday, Digital World announced it had received subpoenas from the same
grand jury convened by the Manhattan U.S. Attorney's Office. Digital World has
been under investigation by the SEC for possible violations for months, a
development that has weighed on the stock.
Digital World stock closed Friday at $5.78, down 25% in a week. It had been
at over $100 last year after the company announced it had a deal to buy the
former president's social media firm.
The SEC has been looking into whether Digital World broke rules by having
substantial talks about buying Trump's company starting early last year before
Digital World sold stock to the public for the first time in September. Just
weeks later it announced it would be buying Trump's company.
Digital World is one of a once-popular group of "blank-check" companies that
go public as empty corporate entities with no operations, only offering
investors the promise they will buy a business in the future. As such, they are
allowed to sell stock to the public quickly without the usual regulatory
disclosures and delays, but only if they haven't already lined up possible
Trump's social media offering, called Truth Social, launched in February. It
said it is fighting Big Tech limits on speech. Trump was banned from Twitter,
Facebook and YouTube last year after the Jan. 6 Capitol riot.
Trump Media last year lined up dozens of investors to pump $1 billion into
the company, but can't get the cash until the Digital World acquisition is
completed. An additional $300 million would come from Digital World itself.