Shares of Digital World Acquisition Corp. — the shell company seeking to take former President Donald Trump‘s social media platform public — soared more than 50% on Friday following the company’s announcement that it had settled fraud charges with the Securities and Exchange Commission for $18 million.
This surge brought DWAC’s stock to roughly $20, still a far cry from its highs above $95 in March of last year.
DWAC is a special purpose acquisition company, or SPAC, that announced plans to merge with Truth Social parent company Trump Media & Technology Group in October 2021. The merger has since faced numerous delays.
DWAC’s SEC settlement dictates that the company must pay an $18 million civil penalty fee if it merges with TMTG and takes the company public. But if the merger does not occur before the Jan. 1, 2025, deadline, and if DWAC returns investors’ money, the SEC has agreed to waive the penalty.
The SEC alleged improper merger discussions had taken place. It is illegal for SPACS to solicit specific merger targets ahead of an actual initial public offering filing.
The settlement also comes on the heels of U.S. government charging three Florida men for DWAC-related insider trading.
The company’s stock has previously seen surges in line with news about the former president, with shares rising, for instance, after Trump’s 2024 presidential bid announcement and indictment.
But the DWAC settlement is the latest in a growing list of legal problems that have ensnared Trump and his businesses since he left the White House in 2021.
He is currently facing state charges in New York that his company falsified business records. He was also indicted in federal court last month for allegedly mishandling classified documents. Trump has pleaded not guilty in both cases.
Authorities in Georgia are also investigating Trump, the frontrunner for the 2024 Republican nomination, over his attempts to overturn his loss in the 2020 presidential election.
DWAC and Trump’s team did not respond immediately to requests for comment.