The EAI Community Securities and Exchange Commission on Thursday charged a so-called "blank check" acquisition company formed to merge with former President Donald Trump's social media company with fraud. 

In announcing a settlement with Digital World Acquisition Corporation, which is listed on the Nasdaq exchange, the SEC said the company misled investors and securities regulators by failing to disclose that it was planning to buy Trump Media & Technology Group before DWAC went public in 2021. 

Digital World is a special purpose acquisition company, or SPAC, a shell company that is created to take a private business public without conducting an initial public offering. 

"In the context of a SPAC — a 'blank-check' entity without business operations — these disclosure failures are particularly problematic because investors focus on factors such as the SPAC's management team and potential merger targets when making financial decisions," Gurbir S. Grewal, director of the SEC's Division of Enforcement, said in a statement. 

Trump Media & Technology Group (TMTG), based in Palm Beach, Florida, operates Trump's social media platform, Truth Social. 

Digital World has struggled to execute the planned merger with TMTG, failing to rally enough shareholder support to close the transaction. Digital World will pay an $18 million penalty if it completes the deal, the SEC said.

For Trump Media, finalizing the deal would bring a critical injection of capital. Before its IPO, Digital World had raised roughly $300 million from investors, which agreed to pour more than $1 billion in funding to the merged entity. 

Shares of Digital World jumped more than 17% after the settlement was announced. 

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• Donald Trump

Alain Sherter

Alain Sherter covers business and economic affairs for CBSNews.com.

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