Trump’s social media company sued by federal government, stock regulators

NEW YORK — Donald Trump’s social media company and some of its employees have received subpoenas from both a federal grand jury and securities regulators, according to a public disclosure Friday, potentially delaying a deal promising a cash injection needed to accept Twitter. or even destroyed.

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 and release $1.3 billion for its fledgling company, but the deal is unlikely to be done amid two legal investigations.

Trump, the chairman of Trump Media, was not among the employees who received subpoenas, according to a statement from Trump Media.

On Monday, Digital World announced it had received subpoenas from the same grand jury convened by the Manhattan US 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 shares closed at $5.78 on Friday, down 25% in a week. Last year it stood at more than $100 after the company announced it had a deal to buy the former president’s social media company.

The SEC investigated whether Digital World broke the rules by having substantial talks about buying Trump’s company early last year before Digital World first sold shares to the public in September. Just weeks later, it announced it would buy Trump’s company.

Digital World is one of the once-popular group of “blank check” companies that go public as empty corporate entities with no operations, offering investors only a promise that they will buy a company in the future. As such, they are allowed to quickly sell shares to the public without the usual regulatory disclosures and delays, but only if they haven’t already set up potential takeover targets.

Trump’s social media offering, called Truth Social, was launched in February. It said it is fighting the Big Tech limits on speech. Trump was banned from Twitter, Facebook and YouTube last year after the January 6 Capitol riot.

Trump Media lined up dozens of investors last year to pump $1 billion into the company, but can’t get the money until the Digital World acquisition is complete. An additional $300 million would come from Digital World itself.

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