The SPAC Association fired back at the SEC in a letter after the regulator yesterday proposed broad new restrictions on how blank-check firms operate.
“We believe these regulatory actions go above and beyond the SEC’s purported goal to enhance disclosures and protect investors,” the association wrote. “When retail investors have participated in de-SPACs, the failings are neither from the inherent construct of the SPAC structure nor the disclosure that is provided to the public markets, which are prepared by the same established capital market law firms and accounting firms as those who service initial public offerings (IPOs), but arguably through access points in the public markets (such as broker-dealers) that are not adequately carrying out their Know Your Customer responsibilities.”
The SEC’s proposed new rules and amendments would seek to:
• Enhance disclosures and provide additional investor protections in SPAC initial public offerings and in business combination transactions between SPACs and private operating companies (de-SPACs);
• Address the treatment under the Securities Act of 1933 of business combination transactions involving a reporting shell company and amend the financial statement requirements applicable to transactions involving shell companies;
• Provide additional guidance on the use of projections in SEC filings to address concerns about their reliability; and
• Assist SPACs in assessing when they may be subject to regulation under the Investment Company Act of 1940.
“The proposed new rules and amendments are an unnecessary reaction to misguided pressure that does not consider the overall benefits to capital markets, job creation or self-imposed corrective actions,” the SPAC Association added.
“While the growth of the SPAC industry has attracted media attention, academic interest and calls for more regulatory oversight, the effects of these proposed rules and amendments will have a deleterious impact on bringing new companies into U.S. markets. SPACs provide access to capital for growing companies in critical sectors that are vital to American innovation. They also serve to address our country’s global competitiveness across industries and sectors. The limits and restrictions proposed by the SEC would inhibit that growth and prosperity.” Read more.
