📋 Tender Overview
The Securities and Exchange Commission announced settled fraud charges against Digital World Acquisition Corporation DWAC a special purpose acquisition company SPAC for making material misrepresentations in forms filed with the SEC as part of DWACs initial public offering and proposed merger with Trump Media Technology Group Corp. TMTG. The Commission finds that DWAC misled investors and the SEC by failing to disclose that it had formulated a plan to acquire and was pursuing the acquisition of TMTG prior to DWACs IPO.The purpose of a SPAC is to identify and acquire an operating business. As such steps taken by a SPAC in furtherance of a particular acquisition are important to investors. According to the SECs order DWAC filed an amended Form S-1 in support of its IPO in early September 2021 that stated that neither DWAC nor its officers and directors had had any discussions with any potential target companies prior to the IPO. But as found in the SECs order dating back to February 2021 an individual who would later become DWACs CEO and Board Chairman and others involved with DWAC had extensive SPAC merger discussions with TMTG. The SECs order further finds that while DWACs CEO and Chairman initially pursued these discussions with TMTG on behalf of another SPAC he created a plan in the spring and summer of 2021 to potentially use DWAC to pursue a merger with TMTG and used this plan to solicit certain pre-IPO investors. The order also finds that DWAC failed to disclose that the CEO had a potential conflict of interest based on an agreement he had signed with TMTG. As a result DWACs amended Form S-1 was materially false and misleading.The SECs order further states that in a later Form S-4 filed with the Commission following the announcement of the proposed merger with TMTG DWAC mischaracterized and omitted information about the history of its interactions with TMTG.
