SEC Cracks Down a Second Time on SPAC Equity Accounting Treatment: Report


 Expanding its crackdown on the SPAC sector, the SEC has told top auditors of blank-check acquisition companies to account more strictly for public shares in these shells, Reuters reports, citing multiple industry accountants and lawyers familiar with the change.

SEC staff have privately told top auditors of SPACs that “redeemable” shares issued by these shells must be treated as temporary – known as “mezzanine” – equity, in a break from the long-standing industry practice of treating them as permanent equity, the sources said.

The change will cause most SPACs to fall below the minimum equity capital requirement of Nasdaq’s Capital Market tier, pushing SPACs looking to list on Nasdaq to its Global Market tier, which has no equity requirement, the people said. Read more.

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