Trump will settle SPAC SEC fraud charges

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The blank-check company planning to take Donald Trump’s media business public will pay an $18 million fine to the Securities and Exchange Commission if the deal goes ahead, under a settlement announced Thursday to settle fraud charges.

Digital World Acquisition Company became a listed company in September 2021 without disclosing to investors that it had already held extensive discussions to acquire Trump Media & Technology Group, which operates the Truth social platform. according to sec,

The SEC said that securities filings submitted at the time of DWAC’s initial public offering contained “material misrepresentations” and violated anti-fraud provisions of the federal securities laws.

“The company also failed to disclose conflicts of interest of its CEO and chairman,” said SEC enforcement chief Gurbir Grewal. According to the SEC, the DWAC chief was willing to personally pay TMTG $1 million if the former president’s media venture failed to find a merger partner.

Special purpose acquisition companies such as DWAC are usually listed on the stock market, attracted by the opportunity to achieve a rapid public listing, with the aim of later merging with an established company.

DWAC briefly became one of the best performing stocks after it announced its planned merger with TMTG in October 2021.

But it has since struggled to keep the deal alive, as multiple regulatory investigations compounded the need to raise cash and difficulty securing necessary approvals from the company’s fractured roster of retail shareholders, among other setbacks.

Securities filings show that the SEC began investigating the deal as early as December 2021.

Separately, federal prosecutors last month filed charges in connection with alleged insider trading against Bruce Garelik, who was once on the DWAC’s board of directors. Garelik has pleaded not guilty. The DWAC has not been accused of any wrongdoing in connection with the investigation by prosecutors.

Shares of DWAC soared nearly 40 percent in early trading on Friday as investors digested news of the SEC deal, which could remove a serious hurdle for the TMTG merger.

DWAC must complete the transaction by September or hand over its cash back to shareholders. The company asked investors to extend that deadline by one year. But according to a regulatory filing, TMTG has informed the company that it is bound by the terms of the merger agreement only till the current deadline.