A financial firm linked to Donald Trump’s Truth Social platform has reached an $18m settlement with the Securities and Exchange Commission (SEC) in order to bring an end to the investigation into its merger with the company. Digital World Acquisition Corp (DWAC) announced the tentative settlement on Monday, saying that the payment would “remove the cloud of uncertainty lingering over DWAC and would allow DWAC to move forward in achieving its objective of delivering a strategic merger”. The SEC had been looking into whether DWAC held talks with Truth Social’s parent company before going public, which would be a violation of certain antifraud provisions of the Securities Act and the Exchange Act. The settlement means once DWAC has paid the civil penalty it can move forward with the merger, which would see Truth Social become a public company. News of the settlement comes after three people involved in the merger were indicted for insider trading last week. Michael Shvartsman, Gerald Shvartsman and Bruce Garelick were named in a federal indictment unsealed last Thursday (29 June) in Manhattan federal court. All three were charged with trading in securities of Digital World Acquisition Corporation (DWAC) based on non-public information about the company’s planned business combination with Trump Media & Technology Group — founded by former president Mr Trump — the parent company of social media platform Truth Social. They were arrested on Thursday morning in Florida. In 2021, the three investors were invited to invest in DWAC and another SPAC. After signing non-disclosure agreements, they were provided with confidential information, including the planned deal with Trump Media. They were prohibited from using this knowledge in the open market. According to the indictment, after making initial investments into DWAC through the initial public offering process, Mr Garelick was given a seat on the board of directors, which gave him access to valuable non-public information about the planned merger. He provided these updates to his co-conspirators, calling it “intelligence”. The defendants bought millions of dollars of DWAC securities on the open market before the news of the Trump Media business combination was public. In addition to their own purchases, they also passed the information to their friends on a trip to Las Vegas, to Michael Shvartsman’s neighbours, and to Gerald Shvartsman’s employees at a furniture supply store. After DWAC’s merger with Trump Media was announced publicly on 20 October 2021, the stock and warrant holdings significantly increased in value. The defendants and the individuals they tipped then sold their DWAC securities for a significant profit. Michael Shvartsman and Bruce Garelick have been charged with five counts of securities fraud under Title 15, each of which carries a maximum sentence of 20 years in prison; Gerald Shvartsman has been charged with three counts. All three defendants have also been charged with one count of securities fraud under Title 18, which carries a maximum sentence of 25 years in prison; and one count of conspiracy, which carries a maximum sentence of five years in prison. Read More Trump news – live: Truth Social SPAC agrees to SEC settlement as Trump’s past comments on indictment resurface Why isn’t Twitter working? How Elon Musk finally broke his site – and why the internet might be about to get worse Trump mocked for ‘weird apocalyptic’ campaign video Trump marks Independence Day by sharing vulgar attack on Biden Truth Social SPAC reaches SEC settlement as Trump indictment comments reemerge – live Trump sparks speculation by ranting about ‘charges against me’ in Georgia