WASHINGTON (Reuters) – The U.S. Securities and Exchange Commission said on Thursday that Digital World Acquisition Corporation, a special purpose acquisition company that plans to merge with the parent company of Donald Trump’s Truth Social platform, settled charges that it made “material misrepresentations” to investors.

DWAC, which was found to have violated antifraud provisions of federal securities laws, agreed to a cease-and-desist order and to pay an $18 million penalty in the event it closes a merger transaction, the SEC said.

The SEC said DWAC misled investors by failing to disclose in filings that it had formulated a plan to acquire Trump Media & Technology Group Corp and was pursuing the acquisition before DWAC’s IPO.

Gurbir Grewal, director of the SEC’s division of enforcement, said DWAC failed to disclose the merger discussions it had with Trump Media & Technology Group and “a material conflict of interest of its CEO and chairman.”

Trump Media & Technology Group in October 2021 announced a deal to go public by merging with DWAC. It remains uncertain.

If it closes, Trump Media would gain access to more than $1 billion in cash from Digital World’s institutional investors, such as hedge funds. According to a Feb. 2, 2021 services agreement, Trump controls 90% of Trump Media.