Jul 3, 2023 - Economy & Business

Truth Social-tied SPAC says it has tentative SEC settlement

 Illustration of the mobile application of former United States president Donald Trump, entitled Truth Social.

An illustration of the former President Trump and a phone displaying his Truth Social app. Photo illustration: Adrien Fillon/NurPhoto via Getty Images

Digital World Acquisition Corp., the special purpose acquisition company that inked a deal to acquire former President Trump's media and tech company, said on Monday that it has struck a tentative settlement with securities regulators.

Why it matters: The SEC's probe into the merger, which would result in Trump's Truth Social becoming a publicly traded company, has delayed the deal considerably. It has until Sept. 8 to close, or the parties can walk away.

Context: The SEC's probe has centered around whether DWAC executives held merger talks with Truth Social's parent company before the SPAC's IPO in 2021.

  • Such discussions are not allowed, per securities regulations.
  • The U.S. Justice Department and the SEC last week filed separate charges against three individuals over insider trading related to the merger.

Details: Under the tentative settlement, DWAC would pay an $18 million penalty and revise some of its regulatory filings.

What we're watching: Whether the deal closes by September 8 — especially since DWAC indicated in its SEC filing that Truth Social's parent company disagrees about being bound to the deal beyond that date (despite DWAC getting a shareholder extension).

Go deeper: Trump's Truth Social troubles

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