The SEC announced that Northern Star Investment II agreed to settle charges that it made misleading statements in forms filed with the SEC as part of its January 2021 IPO. The SEC’s order finds that Northern Star violated an antifraud provision of the Securities Act of 1933. Without admitting or denying the SEC’s findings, Northern Star II agreed to a cease-and-desist order and to pay a $1.5 million penalty in the event it closes a merger transaction.
Northern Star II announced today it will liquidate, but continue as a corporate entity in search of a deal — an unusual move in the SPAC world.
According to the SEC’s order, Northern Star stated in its SEC filings that neither the company, nor anyone acting on its behalf, had initiated any substantive discussions with any potential target companies prior to the IPO. However, the SEC’s order finds that Northern Star had engaged in discussions with a target company and that company’s controlling shareholder in connection with a potential SPAC business combination dating back to December 2020 and continuing for several weeks. Further, according to the SEC’s order, after announcing a merger agreement with the target company, Northern Star did not adequately disclose its interactions with the target company in its Form S-4 filings.
The SPAC announced a deal with Apex Clearing Holdings in February 2021, but the agreement was called off nine months later.
“Northern Star’s failure to disclose discussions with its merger target kept investors in the dark about its future plans, information that would have been important in deciding whether to invest in this SPAC,” said Nicholas P. Grippo, Director of the SEC’s Philadelphia Regional Office. “Given that the purpose of a SPAC is to identify and acquire an operating business, SPACs should be transparent about any pre-IPO discussions with potential acquisition targets.” Read more.
