Blank-check companies may have to reclassify the instruments as liabilities on the balance sheet, the SEC said in a statement.
Some SPACs have improperly accounted for warrants sold or given to investors, securities regulators said, stepping up scrutiny of the popular vehicles, The Wall Street Journal reports.
Warrants are a standard part of how SPACs raise money, including from hedge funds and other private investors. The potential return for early investors in SPACs is huge if the company’s shares rise because of various features of the structure, including warrants that give some investors the right to buy more shares at a preset price in the future. Read more.
