This is not investment advice. The author has no position in any of the stocks mentioned. Wccftech.com has a disclosure and ethics policy.

After months of uncertainty that had jeopardized the proposed merger agreement between the SPAC Digital World (DWAC) and Trump Media and Technology Group (TMTG), the SEC has finally acquiesced to a multi-million-dollar settlement, giving DWAC investors a much-needed impetus to rejoice.

As a refresher, the SPAC Digital World is due to undergo a reverse merger with Trump Media and Technology Group (TMTG), the entity that owns the Twitter-like Truth Social app, paving the way for the shares of the combined entity to trade on the stock exchange.

The SEC disclosed in a press release today:

“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 DWAC’s IPO.”

As per the SEC’s findings, the CEO of Digital World had held a number of preliminary discussions with TMTG as well as other investors in the spring and summer of 2021. However, the SPAC failed to disclose these important discussions in its filings. Later on, once the merger between Digital World and the Trump Media and Technology Group had been finalized, the SPAC’s Form S-4 filing “mischaracterized and omitted” certain pertinent portions of the history of interactions between DWAC and TMTG.

Today’s press statement goes on to note:

“The SEC’s order finds that DWAC violated the antifraud provisions of the federal securities laws. DWAC agreed to a cease-and-desist order and to pay an $18 million penalty in the event it closes a merger transaction. It also agreed to undertake that, should DWAC file an amended Form S-4, any such Form S-4 will be materially complete and accurate and consistent with the findings in the SEC’s order.”

These terms are the same as those that we reported toward the beginning of July when Digital World had first announced reaching a preliminary agreement with the SEC.

Bear in mind that the Trump Media and Technology Group itself is being investigated by federal prosecutors in New York for allegedly violating statutes related to money laundering. The federal authorities are examining loans worth $8 million that were routed through the Caribbean but originated from obscure entities connected with Russian President Vladimir Putin.

At the time of writing, Digital World shares are up 22 percent in after-hours trading.