Digital World SPAC Settles SEC Charges for Material Misrepresentations to Investors

Posted on July 24th, 2023 at 3:17 PM
Digital World SPAC Settles SEC Charges for Material Misrepresentations to Investors

 From the Desk of Jim Eccleston at Eccleston Law.

Digital World Acquisition Corporation (DWAC), a special purpose acquisition company (SPAC), settled fraud charges for making material misrepresentations in forms filed with the SEC as part of DWAC’s initial public offering and proposed merger with Trump Media & Technology Group Corp. (TMTG). The SEC charged that DWAC misled investors and the SEC by failing to disclose a plan to acquire TMTG prior to DWAC’s IPO. 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. 

According to the SEC’s order, DWAC filed an amended Form S-1 in support of its IPO in early September 2021 that stated that neither DWAC nor its officers and directors had had any discussions with any potential target companies prior to the IPO. But, dating back to February 2021, an individual who would later become DWAC’s CEO and Board Chairman, and others involved with DWAC, had extensive SPAC merger discussions with TMTG. The order also found that DWAC failed to disclose that the CEO had a potential conflict of interest based on an agreement he had signed with TMTG. As a result, DWAC’s amended Form S-1 was materially false and misleading.

The SEC’s order found 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

Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.

Related Attorneys: James J. Eccleston

Tags: Eccleston. Eccleston law, DWAC, SPAC, SEC

Return to Archive

TESTIMONIALS

Previous
Next

We just wanted to say thanks for your work in helping us get back some of the money we lost. We are not by any means rich, but we have saved some money and we have done so through a tight-fisted approach to most everything we do. So losing a significant chunk of money hurt…especially at a time when everyone else was growing their accounts. We really appreciate the work you did.

Allan and Adele

LATEST NEWS AND ARTICLES

September 26, 2025
SEC and DOJ Target $770 Million Prestige Funds Ponzi Scheme

Federal regulators say thousands of investors may have lost money in what they allege was a massive Ponzi scheme tied to the Prestige Funds and WF Velocity Funds.

September 25, 2025
FINRA Suspends Spartan Capital Broker for Excessive Trading Violations

The Financial Industry Regulatory Authority (FINRA) has suspended Joseph Kelly, a broker at Spartan Capital Securities, for nine months and ordered him to pay a $10,000 fine and $69,830 in restitution.

September 24, 2025
How New CCOs Can Navigate Today's Compliance Challenges

The role of the chief compliance officer (CCO) has never carried more weight or more complexity, according to Wealth Management.