Months before former President Donald Trump's social media company unveiled an agreement to raise hundreds of millions of dollars last fall, word of the deal leaked to an obscure Miami investment firm, whose executives began plotting ways to make money off the imminent transaction, according to people familiar with the discussions.
The deal - in which a so-called special purpose acquisition company, or SPAC, would merge with Trump's fledgling media business - was announced in October. It sent shares of the SPAC soaring.
Employees at the Miami investment firm, Rocket One Capital, had learned of the pending deal over the summer, long before it was announced, according to three people familiar with the firm's internal discussions. Two of the people said Rocket One officials at the time talked about ways to profit off the soon-to-be- announced transaction with Trump Media & Technology Group by investing in the SPAC, Digital World Acquisition Corporation.
A top Rocket One executive, Bruce Garelick, was on the board of Digital World until he resigned in recent weeks.
In the days before the Trump Media deal became public, there was a surge in trading in a type of security known as warrants, which entitled investors to buy shares of Digital World at a preset price in the future.
Federal prosecutors and regulators are now investigating the merger between Digital World and Trump Media, including the frenzied trading in the SPAC's warrants, according to people familiar with the investigation and public disclosures. Digital World said in a recent regulatory filing that a federal grand jury in Manhattan had issued subpoenas seeking information about Rocket One.
The exact scope of the federal investigations remains unclear. Authorities have not accused anyone of wrongdoing.
A lawyer for Rocket One and its founder, Michael Shvartsman, denied they had any advance knowledge of the merger between Digital World and Trump Media.
A lawyer for Patrick Orlando, who runs Digital World, declined to comment, as did representatives for the Securities and Exchange Commission and the U.S. attorney's office in Manhattan.
Representatives for Trump and Trump Media did not respond to requests for comment. The company has said neither Trump nor Devin Nunes, company CEO and a former congressman, received grand jury subpoenas.