To SPAC or Not to SPAC: How Is the SEC Answering That Question?


Last year saw a boom in the market for SPACs. Almost 250 SPACs raised more than $80 billion in initial public offerings during 2020. This trend did not let up as the calendar year turned. SPACs raised more capital in January and February of 2021 than in all of 2020, the law firm of Parker Poe writes for JD Supra.

However, beginning in April, there was a drastic decline in the number of SPACs. While approximately 320 SPAC IPOs took place in the first quarter of 2021, the numbers in April declined by 90 percent. The downward trend has largely continued since. 

One possible cause of the SPAC slowdown is the spate of pronouncements by the SEC, which seems concerned about the adequacy of disclosures to investors and potential conflicts of interests by management and sponsors. SPACs are typically viewed as a more seamless method of conducting an IPO compared to traditional IPOs and, given the enormous popularity of these transactions over the last several years, the SEC is signaling that more restrictions are needed in order to ensure investor protection. Read more.

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