Digital World Acquisition misled investors about its initial plans to take the owner of Trump’s Truth Social website public, the SEC said. The $18 million settlement will cap a long-running investigation, but the company’s proposed merger remains stalled.
Digital World “failed to disclose its discussions with TMTG and failed to disclose a material conflict of interest of its CEO and Chairman,” said Gurbir S. Grewal, the director of the SEC’s Division of Enforcement. “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.
Digital World said in its statement that it “remains very interested in the transaction with [Trump Media] and is hopeful [the companies] can resolve this interpretative [sic] divergence.” Trump Media officials have not responded to requests for comment since that filing. Digital World’s share price has plunged to $13, down from a high of $175. Trump and his Republican allies have long accused the SEC of political bias in stalling the merger.Digital World’s $18 million penalty must be paid within 14 days of its merger, if it eventually concludes, the SEC said in an
. Officials also said Digital World could forgo the penalty if it dissolves and returns money to shareholders before Jan. 1, 2025.a former Digital World board member and two other men with earning $22 million in illegal profits as part of an insider-trading scheme before the Trump Media merger proposal was publicly announced.
Truth Social, a Twitter-like website launched after Trump was banned from Twitter in the aftermath of Jan. 6, 2021, has become Trump’s main online megaphone. Though he is by far its biggest draw, with more than 5 million followers, the social network has otherwise struggled to gain online attention or relevance.Trump Media told investors in 2021 that the social network would reach 56 million users by 2024.
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