- Digital World Acquisition Corp., the company planning to list Donald Trump’s social media platform, has settled fraud allegations with the SEC.
- DWAC has been ordered to pay an $18 million civil penalty if it completes a definitive merger and takes Trump Media and Technology Group public.
- The settlement with DWAC is the latest in a growing list of legal issues that have misled Trump and his companies.
Former U.S. President and Republican presidential candidate Donald Trump speaks at a campaign event in Council Bluffs, Iowa, July 7, 2023.
Scott Morgan | Portal
WASHINGTON — The Securities and Exchange Commission announced Thursday that it has dismissed allegations of fraud involving Digital World Acquisition Corp. has settled, the company that plans to take former President Donald Trump’s social media venture public.
As part of the settlement, DWAC was ordered to pay an $18 million civil penalty if it goes through a definitive merger and takes Trump Media and Technology Group public.
However, if the merger does not close in time to meet the Jan. 1, 2025 deadline, and if DWAC returns investors’ money, the SEC said it would agree to waive the penalty.
The announcement came less than a month after the US Financial Services Agency charged three Florida men with insider trading in DWAC stock, before announcing plans to merge with Trump’s company, which runs the Truth Social platform.
Shares of DWAC surged 30% in extended trading following the SEC’s announcement.
The fraud allegations stem in part from DWAC’s “substantial SPAC merger talks” with Trump’s media outlets, which the SEC says took place several months before filing for the September 2021 IPO.
In those filings, DWAC falsely stated that “neither DWAC nor its officers and directors had discussions with potential target companies prior to the IPO,” the SEC noted.
SPACs or special purpose acquisition companies may not request specific merger targets before filing for an IPO.
The SEC also found that former DWAC CEO Patrick Orlando had failed to disclose conflicts of interest related to a separate deal he struck with TMTG.
The settlement with DWAC is the latest in a growing list of legal issues troubling Trump and his companies since he left the White House in 2021.
The former president is currently facing charges in New York over his company’s falsifying business records. He was also indicted in federal court last month for alleged mishandling of classified documents. Trump pleaded not guilty to both counts.
Georgia authorities are also investigating Trump, the front-runner for the 2024 Republican nomination, for his attempts to redeem his 2020 presidential election defeat.