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Trump and DWAC SPAC deal faces new federal criminal probe

Truth Social's parent company is in hot water today as Digital World Acquisition Corp. disclosed a new federal criminal probe into the 2021 SPAC deal.

Asif Khan

June 27, 2022 10:45 AM

CHRIS DELMAS/AFP via Getty Images

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Digital World Acquisition Corp. issued an SEC filing today disclosing a new federal criminal probe. The company's SPAC merger with Trump Media & Technology Group now faces another hurdle that could delay the deal that includes the Truth Social app. Shares of DWAC are down nearly 10% today on the news.

Digital World Acquisition Corp. (DWAC) revealed that the company and every member of the board of directors received subpoenas from a federal grand jury in New York.

On June 16, 2022, Digital World became aware that a federal grand jury sitting in the Southern District of New York has issued subpoenas to each member of Digital World’s board of directors; the subpoenas seek certain of the same documents demanded in the above-referenced SEC subpoenas, along with requests relating to Digital World’s S-1 filings, communications with or about multiple individuals, and information regarding Rocket One Capital. Additionally, on June 24, 2022, Digital World received a grand jury subpoena with substantially similar requests. These subpoenas, and the underlying investigations by the Department of Justice and the SEC, can be expected to delay effectiveness of the Registration Statement, which could materially delay, materially impede, or prevent the consummation of the Business Combination.

Shares of DWAC hit as high as $175/share back in October 2021 on the news that investors could get a piece of Trump's new social media app as part of a SPAC deal. Today's SEC filing also disclosed that board member Bruce J. Garelick told management last week that he would resign. Garelick is also the chief strategy officer for Rocket One Capital, another Trump-related company named in the probe.

There is already an outstanding civil probe of DWAC from the Securities and Exchange Commission (SEC). Massachusetts Senator Elizabeth Warren urged SEC Chairman Gary Gensler to investigate the company saying that DWAC “may have committed securities violations by holding private and undisclosed discussions about the merger as early as May 2021, while omitting this information in [SEC] filing and other public statements.”

Digital World Acquisition Corp. says that this grand jury probe wants similar documents that were given to the SEC as a part of that ongoing investigation. Outside of today's SEC filing, DWAC, Trump's representatives, and exiting board member Bruce Garelick have not made any additional comments on the criminal probe.

This article is only meant for educational purposes, and should not be taken as investment advice. Please consider your own investment time horizon, risk tolerance, and consult with a financial advisor before acting on this information.

Asif Khan

CEO/EIC/EIEIO

Asif Khan is the CEO, EIC, and majority shareholder of Shacknews. He began his career in video game journalism as a freelancer in 2001 for Tendobox.com. Asif is a CPA and was formerly an investment adviser representative. After much success in his own personal investments, he retired from his day job in financial services and is currently focused on new private investments. His favorite PC game of all time is Duke Nukem 3D, and he is an unapologetic fan of most things Nintendo. Asif first frequented the Shack when it was sCary's Shugashack to find all things Quake. When he is not immersed in investments or gaming he is a purveyor of fine electronic music. Asif also has an irrational love of Cleveland sports.