Introduction

The shares of Digital World Acquisition Corp. (DWAC) experienced a significant surge of over 50% on Friday after the company announced its settlement of fraud charges with the Securities and Exchange Commission (SEC) for $18 million.

Background

DWAC is a special purpose acquisition company (SPAC) that had planned to merge with the parent company of Truth Social, Trump Media & Technology Group, back in October 2021. However, this merger has encountered multiple delays.

SEC Settlement Details

As per the settlement, DWAC must pay an $18 million civil penalty if it proceeds with the merger and takes the company public. Nevertheless, if the merger fails to occur before January 1, 2025, and DWAC returns investors’ money, the SEC has agreed to waive the penalty.

SEC Allegations and Insider Trading Charges

The SEC accused DWAC of engaging in improper merger discussions, which is illegal for SPACs prior to an official initial public offering filing. Additionally, three Florida men were charged by the US government for insider trading related to DWAC.

Impact on Stock and Legal Troubles

While DWAC’s stock surged following various news related to former President Donald Trump, such as his 2024 presidential bid announcement and indictment, the recent settlement adds to a growing list of legal problems faced by Trump and his businesses since leaving the White House in 2021. Trump is currently facing state charges in New York for falsifying business records and has been indicted in federal court for mishandling classified documents. Furthermore, authorities in Georgia are investigating his attempts to overturn his loss in the 2020 presidential election.

No Immediate Response

Neither DWAC nor Trump’s team have responded immediately to requests for comment regarding the settlement.