DWAC poised to buy Trump Media & Technology Group. Stock rallies as it clears regulatory hurdle, but it also discloses potential snag.

DWAC said the Securities and Exchange Commission declared its registration effective and that it plans to set a date within two business days for a shareholders’ vote on its merger transaction with Trump Media & Technology Group.

If the deal wins approval, the parent of Truth Social will become a publicly-traded company.

Chief Executive Eric Swider said the SEC approval “marks a significant milestone” for the SPAC.

The company also said a dispute with board member Patrick Orlando, who is also the former chief executive and chairman of DWAC “presents a risk to our ability to consummate the business combination on a timely basis (or at all),” according to a filing.

Orlando, who is the controlling affiliate of ARC Global Investments II LLC, the sponsor of DWAC, has expressed a desire for additional compensation, the company said.

The dispute may also have a potential adverse effect on DWAC’s financial condition and stock price, the company said.

Orlando owns 5.49 million founder shares and 1.12 million placement units in the SPAC.

DWAC said Orlando has asked for more stock. This request was denied.

“Orlando may be uncooperative in approving any amendments to the merger agreement that may become necessary and/or in voting the founder shares,” DWAC said. “Mr. Orlando may use his control over the sponsor and the majority of the founder shares as leverage to raise further demands in exchange for performance of his contractual obligation.”

In July, DWAC settled fraud charges with the SEC over charges it misled investors.

Orlando was terminated as chief executive of DWAC in March, 2023, during the SEC’s investigation.

In October of 2022, DWAC announced it would buy Trump Media & Technology Group, owner of Truth Social.

Also read: Trump’s Truth Social merger partner settles fraud charges with SEC over misleading investors