The SEC recently proposed new policies that would require companies being acquired through a SPAC to undergo more stringent disclosure procedures relating to future projections, conflicts of interest, as well as potential dilution upon issuance of additional shares, Yahoo Finance reports.
The new rules would effectively eliminate many of the “safe harbor” protections and advantages of de-SPAC transactions over traditional IPOs that have made them so favorable in recent years. The SEC seeks to better protect investors and their money amid the boom in popularity of “blank check” companies.
According to Georgetown University McDonough School of Business Associate Professor James Angel, simply requiring additional disclosures to be made by companies looking to undergo a de-SPAC transaction will not solve the problem.
“Now, one of the things the SEC is pushing for is more disclosure around the de-SPAC, and they’re also pushing for more liability on everybody involved,” Angel told Yahoo Finance Live. “More disclosure is nice, but that’s really the only tool the SEC has … so more paperwork is really not going to fix the problem.” Read more.
