- Digital World Acquisition Corp. shares slid 10% Monday on reports executives received federal grand jury subpoenas.
- The special purpose acquisition company is planning to take Donald Trump's Truth Social public.
- A report from Kerrisdale Capital earlier this year described the company as riddled with "red flags."
Shares of Digital World Acquisition Corporation, the special purpose acquisition company planning to take former president Donald Trump's social media platform public, slid on Monday as the company announced subpoenas had been issued for some members of its board.
The stock was down as much as 10% on Monday, and was trading at $25.17 as of 10:42 a.m. ET.
The SPAC is attempting to move towards a proposed merger with Truth Social, a social media website billed as an uncensored alternative to Twitter.
The latest subpoena asks for documents related to an earlier inquiry by the Securities and Exchange Commission as well details on its financing of the deal, according to MarketWatch. Since receiving that request on June 16, DWAC also received a grand jury subpoena last Friday, which contains requests for similar documents.
The inquiries have piled onto Digital World's most recent stumbles in the spring, when chief technology officer Josh Adams and chief product developer Billy Boozer resigned from Truth Social. The resignations came after the company struggled to unveil its iPhone app. DWAC shares slid 11% on news of the departures.
The company fell again later in April when Elon Musk moved to buy Twitter for $44 billion, a move that could offer an alternative to Trump's new social media venture. Musk has been a vocal critic of censorship on the platform and his ownership would likely lead to a loosening of Twitter's current content moderation policies.
The scrutiny from regulators has become so intense that some believe the merger between DWAC and Truth Social will never happen. A report from investment firm Kerrisdale Capital calls the Digital World "a poster child for some of the worst abuses" by a special acquisition, adding that DWAC was riddled with "red flags."
"We believe that it will never secure the necessary regulatory approval," the report said in April.