The Securities and Exchange Commission said Trump’s merger partner Truth Social violated the securities law

Although that penalty would cover a long-running investigation, SPAC’s proposed merger with Trump Media & Technology Group remains stalled. The blank check company could be forced into liquidation if the merger is not finalized before the Sept. 8 deadline, returning to investors about $300 million that Trump’s company has long hoped to unlock.

When Digital World announced its initial public offering in September 2021, the company told investors that its executives were not involved in any merger discussions with any company, in line with federal SPAC rules.

The then-Digital World president, Miami financier Patrick Orlando, in fact discussed a merger with Trump Media seven months ago, the SEC said, and the company worked through the summer to get the deal started, citing text messages and other exchanges.

The announcement confirms what has long been rumored about the proposed merger and corroborates claims by Will Wilkerson, the Trump Media CEO who told the SEC in a whistleblower filing last year that the company violated securities laws. Wilkerson was fired after speaking with The Washington Post.

Grewal, director of enforcement at the SEC, said Gurbir S. “These disclosure failures are particularly problematic because investors focus on factors such as SPAC’s management team and potential merger targets when making financial decisions.”

Digital World said in a SEC filing earlier this month that the settlement “removes the cloud of uncertainty” around the company and allows it to move forward with the merger. But it also cited an email in which Trump Media said it “believes it is currently only committed to the merger agreement through September 8, 2023,” a sign that Trump Media may be considering exiting the deal.

Digital World said in its statement that it “remains very interested in the transaction with… [Trump Media] And he is optimistic [the companies] This explanation can be resolved [sic] Divergent.” Trump Media officials have not responded to requests for comment since that filing.

Digital World’s share price fell to $13, down from $175. Trump and his Republican allies have long accused the SEC of political bias in holding up the merger.

The SEC said in a statement that Digital World’s $18 million fine must be paid within 14 days of its merger, if it ultimately comes to an end. to request. The officials also said that Digital World may waive the penalty if it resolves and returns the funds to shareholders before January 1, 2025.

Federal prosecutors in New York last month charged a former Digital World board member and two other men with earning $22 million in illicit profits as part of an insider trading scheme before announcing the Trump Media merger proposal.

Truth Social, a Twitter-like website launched after Trump was banned from Twitter in the wake of the January 6, 2021 insurrection at the US Capitol, has become Trump’s main online megaphone. While it’s by far its biggest draw, with more than 5 million followers, the social network has struggled to gain traction or relevance online.

Trump Media told investors in 2021 that the social network will reach 56 million users by 2024. The site gets nearly 600,000 visits per month, according to estimates from web analytics firm Likeweb.

In a financial disclosure filing this month that covered most of his post-presidency, Trump said the company earned $1.2 million from advertising. The filing also said the value of Trump Media — estimated in late 2021, could rise to $1.7 billion — is now no more than $25 million.