Truth Social-tied SPAC says it has tentative SEC settlement
- Kia Kokalitcheva, author of Axios Pro Rata
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