The company that was going to take Trump Media’s Truth Social public will have to pay an $18 million penalty if the deal goes through.
The company that was supposed to take former President Donald Trump’s Truth Social platform public will have to pay an $18 million penalty if the deal goes through.
Digital World Acquisition Corp., a special purpose acquisition company, or SPAC, settled charges that it violated antifraud provisions and misled investors about its plans for acquiring Trump Media & Technology Group, the Securities and Exchange Commission said Thursday.
Ironically, the company’s stock soared 50% in Friday trading following the settlement announcement. Digital World shares gained $6.58, jumping to $19.94, in midday trading.
At issue was the fact that Digital World Acquisition had a handshake deal to bring Trump Media public before the so-called “blank check” company went public itself. SPAC deals have fallen out of favor in the past two years but were hugely popular during the pandemic, with 613 IPOS in 2021 alone.
The way they work is that a shell company with no active business, like Digital World, gets listed on a stock exchange, which enables it to raise money from investors. The company then searches for a target company that aims to go public, and uses the cash from its IPO to buy it.
