Updated at 9:41 am EST
Digital World Acquisition Corp. (DWAC) , the bank-check company planning to merger with former President Donald Trump's nascent media company, said Monday that its directors have been subpoenaed by a Federal Grand Jury.
DWAC, which is also being investigated by the U.S. Securities and Exchange Commission with respect to its plans to merge with the former President's Trump Media & Technology Group, said the subpoenas were related to the SEC probe and issued by a panel sitting in the Southern District of New York.
Digital World said late last year that it is co-operating with the investigation, which also included the Financial Industry Regulatory Authority (FINRA).
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", a Miami-based hedge fund.
"Additionally, on June 24, 2022, Digital World received a grand jury subpoena with substantially similar requests," DWAC said in an SEC filing. "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."
Digital World shares were marked 10.6% lower in early Monday trading at $25.40 each, a move that still pegs it more than 150% north of its September listing price of $9.96 each.
“TMTG is focused on reclaiming the American people's right to free expression," the group said in a statement following DWAC's SEC filing. "Every day, our team works tirelessly to sustain Truth Social’s rapid growth, onboard new users, and add new features."
"We encourage -- and will cooperate with -- oversight that supports the SEC's important mission of protecting retail investors,” the statement added.
The proposed merger between DWAC and Trump Media followed the former President's plans to return to social media through the launch of a new app dubbed "Truth Social", which he called a "rival to the liberal media consortium and fight back against the "Big Tech” companies of Silicon Valley, which have used their unilateral power to silence opposing voices in America."
Trump was banned from many of the major social media platforms -- including Twitter (TWTR) - Get Twitter Inc. Report and Facebook (META) - Get Meta Platforms Inc. Report -- for his role in igniting the rioters that stormed the Capitol building on January 6 in a failed effort to overturn his election defeat to President Joe Biden.
Digital World is also providing around $293 million as part of a capital raising effort from a group of unnamed investors in TMTG that the group says will top $1.24 billion.
After it launch, DWAC said Truth Social is forecast to have 81 million registered users by 2026, when average revenues per user will rise to $13.50.