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The Trump SPAC deal is threatened with criminal investigation

Former US President Donald Trump received applause at the National Rifle Association (NRA) in Houston (Texas, USA) for its annual conference on May 27, 2022.

Shannon Stapleton | Reuters

A federal criminal investigation is threatening a merger between former President Donald Trump’s social media company and a special-purpose purchasing company, a deal that would allow the combined company to enter billions of dollars in public markets.

The company, Digital World Acquisition Corp., announced in a securities filing on Monday that June 16 it learned that each member of its board of directors had received subpoenas from a federal jury in New York.

The jury wants similar documents that the Securities and Exchange Commission was looking for in an already expanded civilian investigation, the DWAC said. The company itself received a subpoena on Friday with a similar request, along with other requests related to communications, people and information about Rocket One Capital.

DWAC also reported Monday that a board member, Bruce J. Garelick, told management he would step down from management last Wednesday. Garelick said his resignation “was not the result of any disagreement with Digital World’s operations, policies or practices,” according to the company’s presentation.

Garelick Rocket is the CEO of One Capital. He did not immediately respond to CNBC’s request for comment. Rocket One’s website was empty Monday morning, saying, “The site will be available soon. Thank you for your patience!”

The DWAC warned that citations and investigations by the SEC and the U.S. Department of Justice could delay or even prevent Trump from joining the social media company. Shares of the company fell more than 9 percent on Monday morning to about $ 25. Shares rose to more than $ 90 in October after announcing a deal with Trump’s group.

DWAC did not immediately respond to a request for comment.

Development is Trump’s latest political headache. Evidence presented at public hearings by the House committee investigating the January 6, 2021 attack on Trump is increasingly examining the alleged role the former president played in plots to invalidate the 2020 election results. He is also considering jumping into the 2024 White House race.

Trump Media & Technology Group announced in October that it had agreed to merge with DWAC, a company of the same name to “become a public company subject to regulatory and shareholder approval.” This merger would give Trump’s company and its social media platform, Social Truth, more than $ 1 billion in capital and its stock market share. Shares of DWAC rose at the time.

Trump Media did not immediately respond to a request for comment.

The company is run by former GOP deputy Devin Nunes, who was one of Trump’s most loyal defenders in Congress. Trump Media’s Social Truth has already been launched. The former president created it as an alternative to Twitter, and was banned for his tweets on Jan. 6 as he continued to push the false narrative that the election was stolen from him.

Disclosures mark the ultimate problem of SPAC, the ultimate goal of acquiring or merging a type of private enterprise created to raise capital in public capital markets.

The planned links with Truth Social and DWAC were successful from the start.

One of the first criticisms came from Senator Elizabeth Warren, who in November asked SEC President Gary Gensler of the DWAC “to have violated the value of private and unpublished discussions about the merger before May 2021, aside from this information. [SEC] files and other public statements “.

DWAC shares have lost more than half their value in 2022. This is much worse than the poor performance of the wider market this year: the S&P has fallen about 18% in the same period.

– CNBC Thomas Franck contributed to this article.

The Trump SPAC deal is threatened with criminal investigation

Source link The Trump SPAC deal is threatened with criminal investigation

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