UPDATE 2-Digital World shares fall as traders resort to profit taking

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March 22 (Reuters) - Shares of Digital World Acquisition Corp fell 3.5% on Friday as investors resorted to profit-taking after shareholders of the blank-check firm voted in favor of its merger with former U.S. President Donald Trump's media and technology company.

The shares had briefly risen after the vote on the deal that faces uncertainty over a lawsuit and fears of the former U.S. President selling a large portion of his stake in Trump Media & Technology Group (TMTG) - the parent of Trump's social media firm Truth Social.

"I think a lot of investors are selling on the news .... now that it (deal) is happening, some of them are taking profits," said Michael Ashley Schulman, chief investment officer at Running Point Capital.

The vote was the final step in completing the merger that would value TMTG at as much as $8.6 billion.

Schulman added that the possibility of Trump selling shares after the lock-up period ends is having a negative effect on the stock.

Digital World said in a regulatory filing last month that Trump may divest his stake in Truth Social, valued at about $3.6 billion, and cease any involvement in its management based on how his bid for president goes.

The Republican presidential candidate has been grappling with the financial fallout of a slew of legal cases against him.

Among other hurdles the deal is facing, Digital World's former CEO Patrick Orlando and former Trump business associates Andy Litinsky and Wes Moss have filed lawsuits, claiming they were entitled to more shares for their contributions to the merger.

The U.S. Securities and Exchange Commission in February allowed the merger more than two years after it was announced.

(Reporting by Medha Singh, Akash Sriram and Zaheer Kachwala in Bengaluru, additional reporting by Anirban Sen; Editing by Shinjini Ganguli)