Digital World Acquisition Corp. (NASDAQ:DWAC) also known as Trump SPAC (Special Purpose Acquisition Company) has reached an in-principle agreement with the Securities and Exchange Commission’s (SEC) enforcement division over its investigation into the timing, agreements, and certain statements associated with the company’s initial public offer and its business combination with Trump Media & Technology Group Corp (TMTG).
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A final settlement is subject to approval and could mean a cease-and-desist order noting DWAC was in violation of certain antifraud provisions of the Securities Act as well as the Exchange Act.
Moreover, once a merger closes (either with TMTG or another entity), DWAC could end up paying $18 million in civil penalties to the SEC. While TMTG is not a party to the settlement, DWAC has informed it of the settlement discussions.
DWAC believes a settlement is in the best interest of its investors as this could mean a step toward successfully concluding a strategic merger. Consequently, the company’s Board has given the go-ahead for the settlement with the SEC.
In another development, while DWAC is looking to extend its liquidation date from September 8, 2023, to September 8, 2024, TMTG has expressed its disagreement about the extension and “believes it is currently only bound under the merger agreement through September 8, 2023.”
Last month, three people were arrested over charges of insider trading and reaping over $22.9 million in profits on buying up DWAC shares after secretly learning of its plans to acquire TMTG.
From a high of nearly $96 in February 2022, DWAC shares have plummeted to the present $12.6 level. Despite this nosedive, short interest in the stock still stands at about 7.3%.
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