A special purpose acquisition company intending to merge with former president Donald Trump’s Truth Social parent company said on Monday that it reached a not yet finalized settlement with the Securities and Exchange Commission (SEC) over some wrong filings and talks before an allowed date.
The special purpose company, Digital World Acquisition Corp. (DWAC), published the SEC filing on its website which said that a tentative settlement of a penalty of $18 million has been reached with the SEC over the violation of antifraud provisions relating to DWAC’s “IPO filings on Form S-1 and the Form S-4 concerning certain statements, agreements, and omissions relating to the timing and discussions the company [DWAC] had with TMTG regarding the proposed business combination,” DWAC’s SEC filing says.
TMTG refers to Trump Media & Technology Group Corp., the parent company of the social media platform Truth Social.
Axios reported that talks before DWAC’s initial public offering (IPO) in 2021 were violating SEC’s provisions.
TMTG and DWAC had plans to merge so that TMTG could become a publicly traded company. The deadline for the merger is Sept. 8, and TMTG said it has the right to leave the deal if DWAC is not able to go forward.
DWAC has been delayed for a long time because of the SEC’s probe into the timing of talks between DWAC and TMTG.
If approved by the SEC, DWAC believes the settlement would “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 filing says.
If the SEC does not approve the settlement by Sept. 8, TMTG has the right to walk away from the merger, and the filing says that “TMTG may disagree and try to terminate the merger agreement” with DWAC.
TMTG also notified DWAC that it disagrees with DWAC’s proposal of extending the deadline for one year.
SEC Postponement
In February, Truth Social asked Congress to investigate the SEC over the delayed merger alleging “egregious conduct and blatant politicization.”The SEC has been reviewing the merger proposal (S-4 document) the DWAC filed in October 2021 since the time of its filing until now.
DWAC has raised millions of dollars from investors for Truth Social, but progress has been in limbo since October 2021 due to the alleged political actions of federal regulators.
“The SEC has needlessly delayed its review of our proposed merger, causing real and unnecessary financial harm to DWAC investors, roughly 90 percent of whom are small, retail shareholders whom the SEC is chartered to protect,” TMTG said in a press statement in September 2022.
“In the interests of simple fairness, the SEC needs to set aside any improper political considerations and bring its review to a swift conclusion.”
TMTG Sues The Washington Post
TMTG has sued The Washington Post for defamation and is seeking $3.78 billion in damages over an article that allegedly harmed Trump’s company’s reputation and caused “enormous loss.”The lawsuit was filed on May 20 in a Florida state court. It accuses The Washington Post of defamation in connection with a May 13 article labeled in the complaint as an “egregious hit piece” that poses an “existential threat” to Trump’s company.
The suit alleges that The Washington Post article, “Trust Linked to Porn-Friendly Bank Could Gain a Stake in Trump’s Truth Social,” includes a series of “materially false” statements that accused the Trump-owned company of fraud and other wrongdoing.
“WaPo’s false criminal charges exposed TMTG to public ridicule, contempt, and distrust, and injured TMTG’s business and reputation,” the complaint states, while accusing The Washington Post of waging a years-long crusade against the Truth Social owner.
The complaint further states that “WaPo’s latest defamation creates an existential threat for TMTG, causing enormous loss.”
