Digital World Acquisition Corporation, which we'll call "Digital World", issued a prospectus and other documents in preparation for an Initial Public Offering (we'll let the acronym of IPO stand as it is so well known). In those documents, Digital World "failed to disclose that it had formulated a plan to acquire and was pursuing the acquisition of TMTG prior to DWAC’s IPO." Actually, it was worse than that and the Commission's language makes light of a much more serious situation.

The Commission explained "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."

True. But on the Commission's case, Digital World didn't simply fail: it lied (insofar as a company can lie) . The Commission says that "in support of its IPO in early September 2021 that stated that neither Digital World nor its officers and directors had had any discussions with any potential target companies prior to the IPO" but "an individual who would later become Digital World’s CEO and Board Chairman, and others involved with the company, had extensive SPAC merger discussions with Trump Media" (edited).

"The Commission’s order further finds that, while Digital World’s CEO and Chairman initially pursued these discussions with Trump Media on behalf of another SPAC, he created a plan in the spring and summer of 2021 to potentially use Digital World to pursue a merger with TMTG and used this plan to solicit certain pre-IPO investors. "

There's more and the SEC has concluded that Digital World breached the anti-fraud provisions of federal securities laws and that it will enter into a cease and desist order and will pay a civil penalty (not a fine) "in the event that it closes a merger transaction." It still means take-over. Oh, and the company has agreed to file comprehensive and truthful documents in future.