The Securities and Exchange Commission (SEC) and Digital World Acquisition Corp. (DWAC), the company attempting to float former President Donald Trump’s social media business, has struck a settlement on fraud allegations. In accordance with the terms of the deal, DWAC must pay a $18 million civil penalty charge if the merger is completed and Trump Media and Technology Group (TMTG) becomes publicly traded.
However, the SEC has agreed to waive the fine if the merger is not completed by January 1, 2025 and DWAC restores investors’ money. The SEC made its statement after three Florida residents were accused of insider trading for allegedly trading DWAC shares before the announcement of its merger with Trump’s business, which runs the Truth Social platform.
The allegations of fraud originate from DWAC’s purported “extensive SPAC merger discussions” with Trump’s media organization months before the business formally filed documents for its September 2021 initial public offering. In its papers, DWAC made misleading claims that neither the business nor its officers and directors had participated in negotiations with possible target companies before to the IPO, the SEC said. Prior to their first public offerings, SPACs, or special purpose acquisition firms, are not allowed to pursue particular merger candidates.
A second arrangement Patrick Orlando made with TMTG was not disclosed as a conflict of interest, according to the SEC’s inquiry into the matter.
Since he departed the White House in 2021, this settlement is the most recent legal issue that Trump and his companies have had to deal with. The former president was accused in federal court last month for allegedly mishandling confidential papers, and he is presently facing state charges in New York for suspected falsification of business records. In both instances, Trump has entered a not-guilty plea. In addition, Georgian officials are looking into Trump’s efforts to reverse his defeat in the 2020 presidential election.
The settlement with DWAC illustrates the ongoing legal saga involving Trump and the rising legal questions that have been raised about his business dealings ever since his administration came to an end. All eyes are on the verdict and any possible repercussions for both DWAC and Trump Media and Technology Group as the firm pushes ahead with its intentions to combine with Trump’s social media business.