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The charges stem from DWAC’s misleading statements made in documents submitted to the SEC during its initial public offering and proposed merger with Trump Media & Technology Group. The SEC determined that DWAC failed to disclose its intention to acquire TMTG prior to DWAC’s IPO and misled both investors and the SEC.
SPACs are designed to identify and acquire operating businesses, so the actions taken by a SPAC in pursuing a specific acquisition are crucial information for investors. According to the SEC’s findings, DWAC filed an amended Form S-1 in September 2021, prior to its IPO, stating that there were no discussions with potential target companies.
However, the SEC discovered that as early as February 2021, individuals associated with DWAC, including the future CEO and Board Chairman, had extensive discussions about merging with TMTG.
The SEC also found that DWAC’s CEO and Chairman, originally engaging in these discussions on behalf of another SPAC, developed a plan in mid-2021 to potentially use DWAC for a merger with TMTG and used this plan to attract certain pre-IPO investors.
Additionally, DWAC failed to disclose the CEO’s potential conflict of interest arising from an agreement signed with TMTG. Consequently, DWAC’s amended Form S-1 contained significant false and misleading information.
