The investment company that planned to merge with the parent company of former President Trump’s Truth Social app has been fined $18 million by the Securities and Exchange Commission (SEC), the agency announced Thursday.
Digital World Acquisition Corp. (DWAC) raised roughly $300 million in 2021 and later promised it would merge with Trump Media & Technology Group (TMTG), but the SEC claims its disclosures to investors were misleading.
The merger has not yet occurred, but with the SEC matter settled, it may be able to go ahead. If it does not finish by a Sept. 8 deadline, the roughly $300 million will be returned.
DWAC is a special purpose acquisition company (SPAC), a blank-check firm that can buy and help bring a company public. The SEC alleges DWAC planned on buying the Trump company before it raised its $300 million in IPO funds, but it did not reveal that plan to investors as required.
“DWAC failed to disclose its discussions with TMTG and failed to disclose a material conflict of interest of its CEO and Chairman,” SEC enforcement director Gurbir Grewal said in a statement.
“In the context of a SPAC — a ‘blank-check’ entity without business operations — these disclosure failures are particularly problematic because investors focus on factors such as the SPAC’s management team and potential merger targets when making financial decisions,” Grewel continued.
The company will have to pay the fine if the merger goes through. The SEC began the investigation shortly after DWAC announced its intent to merge with the Trump media company in 2021.
In June, three DWAC investors were charged with insider trading related to the merger deal, making a total of $22 million off the company’s stock using privileged information.
Trump Media & Technology Group, which is owned by Trump and run by former Rep. Devin Nunes (R-Calif.), has not been accused of wrongdoing in either investigation.
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