Trump-linked SPAC to pay $18M fine to SEC over ‘material misrepresentations’

investmentnews.com:

Digital World Acquisition Co., a blank-check company, has found itself entangled in a web of legal trouble with the Securities and Exchange Commission over its proposed merger with media giant Trump Media and Technology Group.

The SEC’s investigation revealed that DWAC had misled investors and failed to disclose crucial information during its September 2021 initial public offering. The commission accused DWAC of engaging in extensive discussions with TMTG before going public, without notifying its shareholders of these ongoing negotiations. Such misleading disclosures violated federal securities laws and raised concerns about conflicts of interest involving DWAC’s CEO and chairman.

“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,” Gurbir S. Grewal, director of the SEC’s division of enforcement, said ina statement.

As part of the settlement, DWAC agreed to pay a substantial penalty of $18 million to the SEC, a move aimed at resolving the fraud charges. However, this agreement raises questions about the future of the much-anticipated merger between DWAC and TMTG, which operates the popular Truth Social platform, which is known as the former president’s primary platform for connecting with his supporters online.

The road to the merger has been fraught with hurdles for DWAC, compounded by multiple regulatory investigations and the need to secure approval from its diverse roster of retail shareholders. The SEC initiated its investigation as early as December 2021, creating uncertainty and volatility in DWAC’s stock price.

Adding to DWAC’s troubles, federal prosecutors recently charged