Former U.S. President and Republican presidential candidate Donald Trump speaks at an election event in Council Bluffs, Iowa, July 7, 2023.
Scott Morgan | Reuters
WASHINGTON — The Securities and Exchange Commission announced Thursday that: settlement for fraud and Digital World Acquisition Corporationis a company seeking to take former President Donald Trump’s social media business public.
As part of the settlement, DWAC was ordered to carry out the final merger and pay $18 million in civil penalties if it goes public with Trump Media and Technology Group.
However, the SEC said it would agree to waive the fine if the merger was not completed by the Jan. 1, 2025 deadline and DWAC returned the funds to its investors.
The announcement comes less than a month after the SEC indicted three Florida men for insider trading of DWAC stock before announcing plans to merge with Trump’s company, which operates the Truth Social platform.
DWAC shares rose 30% in after-hours trading after the SEC announcement.
The fraud allegations stem in part from the SEC’s allegations that DWAC held “extensive SPAC merger talks” with President Trump’s media companies months before filing for a September 2021 public offering.
In those filings, the SEC found that DWAC falsely stated that “neither DWAC nor its officers or directors had any discussions with potential targets prior to the IPO.”
SPACs (Special Purpose Acquisition Companies) are prohibited from soliciting specific merger targets prior to an initial public offering.
The SEC also failed to disclose a conflict of interest related to a separate deal that former DWAC CEO Patrick Orlando signed with TMTG, it turns out.
The DWAC settlement is the latest in a growing list of legal issues that have engulfed Trump and his companies since he left the White House in 2021.
The former president is currently facing state indictment in New York state for allegedly falsifying company records. He was also indicted in federal court last month on charges of mishandling classified documents. Mr Trump has pleaded not guilty in both cases.
Georgia officials are also investigating Trump, the frontrunner for the 2024 Republican nomination, for allegedly trying to reverse his 2020 presidential election loss.