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#Trump’s #media #StartUp announced in Oct 2021 that it planned to #merge w/a Miami-based co called #DigitalWorldAcquisition…
Now, almost 2yrs later, … w/the #merger stalled for months, #DigitalWorld is fast approaching a Sept 8 deadline for the merger to close & has scheduled a #shareholder meeting for Tues in hopes of getting enough votes to #extend the deadline another year.
#Tech #SPAC #InsiderTrading #SEC
https://www.washingtonpost.com/technology/2023/09/02/truth-social-trump-media-digital-world/
If the vote fails, #DigitalWorld will be required by #law to liquidate and return $300M to its #shareholders, leaving #Trump’s co w/nothing from the transaction.…
DigitalWorld’s efforts to merge w/#TrumpMedia have been troubled almost from the start, beset by allegations that it began its conversations w/TFG’s company before they were permitted under #SPAC rules.
Then, in the past yr, its issues became more pronounced: Its chief exec was terminated by the board, a fmr board member was #arrested on charges of #InsiderTrading, & the co agreed to pay an $18M #settlement to resolve charges that it had #MisledInvestors & given false info to the #SEC.…
SPACs are known as “#BlankCheck” companies because they raise money from #investors to buy a #private company before identifying who they intend to target.
Once the SPAC decides on & discloses its target, it works to merge w/that co & bring it to the #public stock market, avoiding some of the demands of a more traditional #IPO.
If the #SPAC is unable to complete the #merger w/in the time it specifies, it must return the money it raised to #shareholders.
#DigitalWorld completed its IPO on Sept 8, 2021, & set a “termination date” for when the #merger would be completed 1 yr later, it said in #SEC filings.
Then, last Aug, #DigitalWorld… asked #shareholders to approve up to four three-months extensions.
Digital World’s leaders then staged an intense get-out-the-vote campaign, postponing shareholder meetings six times as they worked to secure enough investor support. After drawing on millions of dollars in funding from its corporate sponsor, #ARCGlobalInvestmentsII, the co was ultimately able to extend its deadline to Sept 8 of this year.
…If the extension fails, #DigitalWorld said in a filing in July that it would “cease all operations except for the purpose of winding up” & repay #investors at a price of about $10.24 per share — far below what many #shareholders paid.…
#Trump Media has blamed the #SEC (of course) for the deal’s troubles, saying in a statement last year that the agency had worked to “sabotage” the #merger for #political reasons w/ “a bureaucratic black hole of inaction.”
But the #SEC, which requires a #SPAC to meet #disclosure requirements & other closing conditions before permitting a #merger, said in July that it had investigated #DigitalWorld & found it had made “material #misrepresentations” to #investors.
In filings dating back to its Sept 2021 #IPO, Digital World execs said they had not participated in merger discussions w/any companies when in fact they’d started speaking w/#Trump Media months earlier, in violation of federal anti-#fraud guidelines….