The number of SPAC IPOs jumped from 13 in 2016 to 59 in 2019, 248 in 2020, and 407 so far in 2021. There has also been a significant increase in regulatory scrutiny and civil lawsuits concerning SPACs, write attorneys with Kramer Levin Naftalis & Frankel, publishing on Mondaq.
In the first half of 2021 alone, the SEC issued several statements on SPACs and signaled a willingness to bring enforcement actions. In that same period, private plaintiffs filed fourteen SPAC-related federal class actions, twice the number filed in 2020.
SPAC sponsors face the risk that allegations will be made that their registration and proxy statements do not contain sufficient disclosures about the target and their own interests and conflicts.
Plaintiffs have also brought breach of fiduciary duty and other claims against SPAC sponsors and SPAC-related parties in state courts. Their claims often raise questions about the fundamental soundness of SPACs. But SPACs are not inherently improper, as some have tried to make them out to be. Done right, SPACs are the healthy product of a functioning free enterprise system. Read more.
