Subpoenas and Investigations Could End Trump’s SPAC Dreams for Truth Social

Subpoenas and Investigations Could End Trump’s SPAC Dreams for Truth Social
Photo: Drew Angerer, Getty Images

A new round of grand jury subpoenas threatens to upend former President Donald Trump’s plan of taking the company behind Truth Social public through a SPAC.

On Monday, Digital World Acquisition Corp (DWAC), a shell company Trump plans to merge with his fledgling tech venture — Trump Media & Technology Group (TMTG) — so as to go public, revealed that its board of directors had received subpoenas issued by a federal grand jury in the Southern District of New York. Those subpoenas, when taken alongside with an expanded Securities and Exchange Commission investigation, threaten to bury Trump’s SPAC plan before it even begins, the board of directors said.

“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,” DWAC said in Monday SEC filings

DWAC added that investigators sought out “various documents and information,” including items reflecting DWAC due diligence in relation to Trump Media & Technology Group as well as other companies DWAC potentially targeted. DWAC claims the subpoenas sent to its individual members asked for similar types of documents in addition to requests for information involving DWAC’s S-1 filings and information regarding the firm Rocket One Capital. If the Southern District of New York sounds familiar, that’s probably because the Manhattan district attorney, a former prosecutor in the Southern District, has his own criminal investigation into Trump ongoing.

All told, DWAC said the slew of subpoenas and ever-growing investigation could throw a wrench in its plans and delay or even kill its merger with TMTG.

If that happens, Trump could be forced into the uncomfortable position of shopping around for new SPAC suitors. That wouldn’t have stung so much last year or in 2020 when new SPACs were seemingly popping up around every corner, but changing market trends and threats of regulations have reportedly made the merger technique much less palatable on Wall Street of late.

“Last year was one of the best years in terms of SPACs,” former investment bank analyst Gary Stein told the New York Times earlier this month. “This year is probably one of the more difficult ones for me to navigate.”

The storm cloud following Trump’s SPAC plan has also eaten into DWAC’s stock value. Following its fillings on Monday, Bloomberg noted DWAC dropped 10%, falling to its lowest levels since the TMTG merger deal was first announced.

SEC Investigators have gradually turned up the heat on DWAC in the seven months since it first launched its probe. Earlier this month the agency announced it had expanded its investigation into DWAC and sought out additional documents to determine whether or not DWAC and the Trump team negotiated terms before DWAC officially went public.

TMTG and DWAC did not immediately respond to Gizmodo’s requests for comment.