New guidance from the SEC on SPACs is already causing a huge slowdown in the market, according to several prominent law firms.
The SEC said last wek that SPAC warrants must be classified as liabilities instead of equity instruments. This could result in existing SPACs having to restate their financial statements, according to the law firm Davis Polk & Wardwell. The SEC also recently said that it is going to carefully scrutinize financial projections from companies going public through SPACs.
“We are not aware of other situations in the recent past where the SEC staff, with no notice or comment, simply issued a proclamation that had such a significant chilling effect on capital markets activities,” Davis Polk wrote in a statement. Read more.
