Every member of the board of directors at Digital World Acquisition Corp. (DWAC) and the company itself were recently hit with federal grand jury subpoenas connected to an investigation into the company, and now, DWAC’s stock price has taken another hit.
DWAC is the so-called blank check firm that’s set — on paper, at least — to merge with Trump’s Trump Media & Technology Group and help bring it public. That Trump company is what’s behind Truth Social, the former president’s alternative social media platform that he now uses after getting banned from mainstream sites like Facebook and Twitter. Federal investigative efforts seem to hinge at least in part on the question of whether there were negotiations between DWAC and Trump’s team before DWAC went public, which would be illegal under federal law. The grand jury subpoenas sought items including materials that have also been pursued by the Securities and Exchange Commission (SEC) — another federal entity investigating DWAC and thereby putting heat on the business arrangement behind Trump’s social media ambitions.
CNN Business reported DWAC’s stock price to have fallen almost 10 percent Monday following the news of the grand jury subpoenas, which the company revealed in a filing with the SEC. “The stock has now lost more than half its value this year, adding to doubts about the merger going through,” CNN adds. The Trump Media & Technology Group indicated Monday it intended to comply with federal investigations… at least to an extent. “TMTG is focused on reclaiming the American people’s right to free expression,” they said. (That right isn’t in need of “reclaiming.”) “Every day, our team works tirelessly to sustain Truth Social’s rapid growth, onboard new users, and add new features… we encourage — and will cooperate with — oversight that supports the SEC’s important mission of protecting retail investors.” That phrasing sounds like Trump’s company is showing deference to the SEC, although you could take it as setting the stage for resistance via claiming the Truth Social-connected probe at the SEC doesn’t actually fulfill those ideals for its work.
In a filing earlier this month, DWAC revealed the SEC sought “communications regarding and due diligence of potential targets other than” Trump’s company, suggesting the agency wanted to closely look at whether there’d been any alternatives explored inside DWAC for the company with which it would merge. “Any resolution of the investigation could result in the imposition of significant penalties, injunctions, prohibitions on the conduct of Digital World’s business, damage to its reputation, and other sanctions against Digital World,” DWAC said in that earlier filing regarding the SEC probe. All that was before the public revelation of a federal grand jury investigation into DWAC. The company has also lost one of its board members: Bruce Garelick, who resigned effective June 22. DWAC claimed his departure to be unrelated to any disagreements about the company’s “operations, policies, or practices.” Info about a Miami venture firm (Rocket One Capital) where Garelick’s an exec was among the subjects of the grand jury subpoenas.
Featured image: Gage Skidmore, available under a Creative Commons license