(Forbes) Digital World Acquisition Corp.—the Nasdaq-listed blank check firm that has agreed to acquire Truth Social’s parent company and take it public—announced Monday it has agreed to pay a civil penalty of $18 million to settle a Securities and Exchange Commission probe into the acquisition, days after one of its former board members was arrested on charges of insider trading.
CRUCIAL QUOTE
The company said the settlement will help “remove the cloud of uncertainty lingering over DWAC and would allow DWAC to move forward in achieving its objective of delivering a strategic merger.” The company also added that failing to reach a settlement would “would create a substantial risk of protracted litigation…which could inhibit the Company’s ability to consummate the business combination with TMTG”
BIG NUMBER
19.8%. That is how much the value of DWAC shares has dropped since the start of this year. The stock is down by nearly 0.5% in pre-market trading early Tuesday morning.
KEY BACKGROUND
DWAC’s efforts to complete its acquisition of TMTG have been mired in several issues over the past year. Late last month, three people—including a former DWAC board member—were arrested and chargedwith insider trading by federal prosecutors. In May, the company informed the SEC that its financial statements through 2022 should not be relied upon, as they contain errors in “accounting for certain expenses.” These problems have led to repeated delays in the completion of the merger. Last September, the company missed its customary two-year deadline, during which a SPAC is required to complete an acquisition, but managed to seek an extension till September 8, 2023, from its shareholders. The company is now seeking an additional 12-month extension to the merger deadline, but has been informed that TMTG is only bound by the merger terms until the current deadline.
