The Digital World Acquisition Corporation (NASDAQ:DWAC), a special purpose acquisition company (SPAC) has been charged with material misrepresentations by the Securities and Exchange Commission (SEC). DWAC has agreed to a cease-and-desist order and to pay an $18 million penalty in the event it closes a merger transaction.
DWAC had proposed a merger with Trump Media & Technology Group Corp. (TMTG). The SPAC was formed to pursue a combination with a Fintech or media firm.
TMTG is the company that operates Truth Social, the social media platform that competes with Twitter.
Shares in DWAC have surged on the news of the settlement.
The SEC claimed that DWAC misled investors by failing to disclose it already had a plan in place to pursue an acquisition of TMTG prior to the IPO. The SEC order also finds that DWAC failed to disclose that the CEO had a potential conflict of interest based on an agreement he had signed with TMTG. As a result, DWAC’s amended Form S-1 was materially false and misleading.
Beyond the penalty, DWAC has agreed that should it file an amended Form S-4, any such Form S-4 will be materially complete and accurate and consistent with the findings in the SEC’s order.
