A public report issued last Friday indicates that Donald Trump’s social media startup company and some employees were served subpoenas issued by a federal grand jury and security regulators. The demands for testimony could delay or end an agreement that is designed to provide the company with the cash needed to battle social media tech giants.
The grand jury empaneled by the U.S. District Court for the Southern District of New York and the federal Securities and Exchange Commission (SEC) directed the subpoenas to the Trump Media & Technology Group.
The subpoenas were detailed in a securities filing by Digital World Acquisition Corp. last Friday. Digital World has reached an agreement in principle to purchase Trump Media for $1.3 billion. The deal is jeopardized by the legal inquiries.
Trump was not personally served with any subpoenas according to a press statement issued by Trump Media. He acts as the company’s chairman.
Digital World announced it was in receipt of the subpoenas in a Monday statement. That company has been under SEC investigation for several months regarding possible securities law violations.
Digital World’s stock price has fallen by more than 53% since the beginning of the year. It was trading on Monday at around $24 per share after selling for nearly $100 per share when the agreement to purchase Trump Media was first announced last year.
The SEC investigation into Digital World has focused on whether the company broke securities rules by engaging in substantial discussions with Trump Media last year about a purchase before it offered its stock to the public in September.
Shortly after its initial public stock offering, Digital World announced it had agreed to acquire Trump Media.
Digital World is what has been described as a “blank-check” company, a type that was popular in recent years. Those types of companies go public as “shell” corporate entities with no operations or income, offering investors the promise of future corporate acquisitions.
Blank-check companies are allowed to make initial public stock offerings without traditional regulation, but only if they have not previously arranged deals with acquisition targets.
Trump Media’s platform, Truth Social, launched operations in February. It says its mission is to fight Big Tech censorship of free speech. President Trump was banned from all major social media platforms virtually simultaneously last year shortly after January 6.