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Rumors about Trump’s media deal are said to have leaked months before.

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Months before former President Donald Trump’s social networking site unveiled a deal to raise hundreds of millions of dollars last fall, word of the deal leaked to a little-known Miami-based investment firm whose executives began mulling ways to cash in on the upcoming deal. people familiar with the discussions.

The deal, which would see the so-called Special Purpose Acquisition Company, or SPAC, merge with Mr. Trump’s nascent media business, was announced in October. This caused a surge in SPAC shares.

Miami-based investment firm Rocket One Capital learned of the deal over the summer, long before it was announced, according to three people familiar with the firm’s internal discussions. Two of them said that Rocket One officials at the time were talking about ways to profit from the soon-to-be-announced Trump Media & Technology Group deal by investing in SPAC, the Digital World Acquisition Corporation.

In the days before the Trump Media deal went public, there was a surge in trading in securities known as warrants, which gave investors the right to buy Digital World shares at a predetermined price in the future.

Federal prosecutors and regulators are currently investigating the Digital World-Trump Media merger, including the frenzied trading of SPAC warrants, according to people familiar with the investigation and the public disclosures. Digital World reported in a recent regulatory filing that a federal grand jury in Manhattan issued subpoenas seeking information about Rocket One, among other things.

The exact scope of federal investigations remains unclear. Authorities charged no wrongdoing, and representatives of Mr. Garelik and others denied any wrongdoing.

Rocket One lawyer and founder Mikhail Shvartsman denied that they had prior knowledge of the Digital World-Trump Media merger. He added that “any claim to the contrary is false.”

A lawyer for Patrick Orlando, who runs Digital World, declined to comment, as did representatives from the Securities and Exchange Commission and the US Attorney’s Office in Manhattan.

Representatives for Mr. Trump and Trump Media did not respond to requests for comment. The company said in a recent press release that neither Mr. Trump nor Devin Nunes, a former congressman from California who is the company’s chief executive, have received grand jury subpoenas. (In the release, the men were identified only by their positions.)

An investigation into Digital World’s unusual securities trading was the latest blow to Mr. Trump’s social media venture, which has been plagued by technological problems and slow user growth.

Federal authorities are also investigating whether Digital World’s disclosures about merger talks with Trump Media violate rules governing SPAC. And the Securities and Exchange Commission is considering blocking the merger, according to Digital World regulations. If the deal does not go through, it will deprive Trump Media of $1.3 billion.

There is scant public information about Rocket One, which has less than 10 employees and has made about 20 early-stage investments over the past decade, according to a review of archived web pages and analysis by PitchBook, a data company. Rocket One took its website down shortly after its name appeared on Digital World’s regulatory filings.

Two of the people familiar with Rocket One’s internal discussions said Mr. Garelik, a former Boston hedge fund manager and now Rocket One’s chief strategy officer, mentioned a possible deal with Trump Media to some employees last summer. Around the same time, a Rocket One employee was ordered to conduct a financial analysis of Digital World, including its warrants, according to one source.

Karl Schoppl, a lawyer representing Mr Garelik, declined to comment. “We expressly reserve all rights to bring libel suits with respect to any article that says, suggests or otherwise implies that Bruce J. Garelik has committed insider trading or any violation of the law,” Mr. Schoppl said in an email. .

Federal prosecutors and securities regulators are trying to determine why traders snapped up the millions of warrants issued by Digital World in the days before the announcement of the Trump Media merger on October 20. Digital World shares and warrants surged the next day, with shares up 350 percent and warrants nearly 1,300 percent.

Shares of Digital World closed Monday at $29.51, well below the high of $97 set in March but well above the IPO price of $10.

As a result of the merger with Digital World, Trump Media will have access to approximately $300 million that Digital World raised in its September IPO.

Trump Media’s only product is Truth Social, a Twitter-like social media platform. Over the past few weeks, it has become Mr. Trump’s primary means of direct communication with his supporters. Among other things, he used Truth Social to criticize the congressional committee investigating the attack on the US Capitol on January 6, 2021. With Mr. Trump banned from Twitter, the platform’s importance could rise as the former president considers another White House bid.

In addition to the unusual trading investigation, federal authorities are continuing to investigate whether Digital World and Trump Media executives began talks about a potential merger before Digital World sold shares through an initial public offering in September. During Digital World’s initial public offering, the company said in public documents that it had not yet determined the purpose of the merger. But The New York Times previously reported that talks between Mr. Orlando and Trump Media officials were already underway.

If Digital World did not inform investors about ongoing merger talks, it would be in violation of SEC rules.

The issuance of a grand jury subpoena is usually a sign that prosecutors are conducting a criminal investigation.

Among those who received grand jury subpoenas in late June were Wes Moss and Andy Litinsky (also known as Andy Dean), two former contestants on Mr. Trump’s reality show The Apprentice. cause.

Shortly after Mr. Trump left office, Mr. Moss and Mr. Litinsky pitched the idea of ​​a Trump-branded social media company to the former president. The Times previously reported that they were involved in some of the early talks with Mr Orlando.

Mr. Moss and Mr. Litinsky, once top executives at Trump Media, did not respond to requests for comment. Mr. Litinsky no longer works for Trump Media; Moss’ official status is unclear.

Securities regulators have also requested information from Digital World about the role of financial advisor to the Shanghai-based ARC Group’s SPAC, according to regulatory filings. Earlier, federal regulators issued a reprimand to the ARC. In 2017, the SEC banned ARC executives from listing shares in three companies, citing “material misstatements” in their securities filings and lack of cooperation from executives.

Ben Protess made a report. Susan S. Beachy contributed to research.

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