SEC Charges Digital World Acquisition Corporation with Fraudulent Disclosure Violations

The Securities and Exchange Commission has found that Digital World Acquisition Corporation (DWAC), a special purpose acquisition company, violated the antifraud provisions of federal securities laws by making material misrepresentations in forms it filed with the SEC. DWAC misled investors and the SEC by failing to disclose that it had formulated a plan to acquire Trump Media & Technology Group Corp. (TMTG) prior to its initial public offering, when it led investors to believe that they had not had any discussions with any target companies. It was later found that the CEO and others involved with DWAC had extensive SPAC merger discussions with TMTG dating back to February 2021. In addition DWAC also failed to disclose that its CEO had a potential conflict of interest due to an agreement he had signed with TMTG. DWAC has agreed to pay a $18 million penalty in the event it closes a merger transaction, undertake that any amended Form S-4 filed in the future be materially complete and accurate, and agree to cease-and-desist from committing similar violations.