The social media app will be developed by Trump Media and Technology Group (TMTG).
Rafael Henrique Light Rocket | Getty Images
Shares of Digital World Acquisition Corporation — the shell company that wants to take former President Donald Trump’s social media platform public — surged more than 50 percent Friday after the company announced that Settlement of Fraud Charges with the Securities and Exchange Commission for $18 million.
The increase lifted DWAC’s stock to around $20, a far cry from the highs above $95 in March of last year.
DWAC is a special purpose acquisition company, or SPAC, that announced plans to merge with Truth Social parent company Trump Media and Technology Group in October 2021. There have been several delays since the merger.
DWAC’s SEC settlement mandates that the company must pay an $18 million civil penalty fee if the company merges with TMTG and takes the company public. But if the merger doesn’t happen before the Jan. 1, 2025, deadline, and if DWAC returns investors’ money, the SEC has agreed to waive the penalty.
The SEC alleged that the merger had been improperly negotiated. It is illegal for SPACS to achieve certain merger goals before filing an actual initial public offering.
The settlement also comes after the US government charged three Florida men with insider trading related to DWAC.
The company’s stock has previously seen a rise in response to news about the former president, for example, after the announcement of Trump’s 2024 presidential bid and the indictment, shares rose.
But the DWAC settlement is the latest in a growing list of legal problems that have dogged Trump and his businesses since he left the White House in 2021.
He is currently facing state charges in New York that his company falsified business records. He was also indicted in federal court last month on charges of mishandling classified documents. Trump has pleaded not guilty to both counts.
Authorities in Georgia are also investigating efforts by Trump, the front-runner for the 2024 Republican nomination, to overturn his loss in the 2020 presidential election.
DWAC and Trump’s team did not immediately respond to requests for comment.