Topline
Digital World Acquisition Corp.—the Nasdaq-listed blank check firm that has agreed to acquire Truth Social’s parent company and take it public—announced Monday it has agreed to pay a civil penalty of $18 million to settle a Securities and Exchange Commission probe into the acquisition, days after two of its former board members were arrested on charges of insider trading.
FILE PHOTO: If approved by the SEC the settlement will find that the DWAC “violated certain … [+]
Key Facts
The exact terms of the settlement have not yet been finalized and will need the SEC’s approval and any penalty payment will take place after the acquisition is completed, the company disclosed in a filing.
DWAC’s agreement to acquire Trump Media & Technology Group (TMTG) was being probed by the SEC for potential violation of security laws, as the special purpose acquisition company reportedly held talks with TMTG before going public.
If the SEC approves the settlement, it will enter a cease-and-desist order, finding DWAC “violated certain antifraud provisions of the Securities Act and the Exchange Act.”
The violations pertain to DWAC’s initial public offering process and “certain statements, agreements and omissions relating to the timing and discussions” with TMTG.
The filing notes that TMTG is not a party to the settlement and the company may disapprove and “try to terminate” the merger.
Crucial Quote
The company said the settlement will help “remove the cloud of uncertainty lingering over DWAC and would allow DWAC to move forward in achieving its objective of delivering a strategic merger.” The company also added that failing to reach a settlement would “would create a substantial risk of protracted litigation…which could inhibit the Company’s ability to consummate the business combination with TMTG”
Big Number
19.8%. That is how much the value of DWAC shares has dropped since the start of this year. The stock is down by nearly 0.5% in pre-market trading early Tuesday morning.
Source: https://www.forbes.com/sites/siladityaray/2023/07/04/truth-social-spac-agrees-to-pay-18-million-to-settle-sec-investigation-into-merger/