As regulatory scrutiny, litigation, and the threat of legal changes mount, Baker McKenzie corporate partner Michelle Heisner asks whether the market may be poised for a backlash against SPACs, Bloomberg Law reports.
Critics say that the market is oversaturated, with SPACs that often seem to be characterized more by hype than by substance. Given the sheer dominance of the vehicle, it is guaranteed that some portion will not live up to expectations.
The fact that SPACs typically target early-stage companies only heightens the risk. Already, some hedge funds are shorting select SPACs. S3 Partners, a research firm that tracks short activity in U.S. markets, identified that short positions in SPACs, which totaled $724 million at the beginning of 2021, have jumped to $2.7 billion in less than three months. Read more.
