John Coates, the SEC’s Acting Director, Division of Corporation Finance, released a statement about how securities laws apply to blank-check firms. His words could be perceived as a warning.
The SEC thinks financial forecasts for SPACs might be a problem. They can be “untested, speculative, misleading or even fraudulent,” Coates wrote.
Other key takeaways from his remarks:
Are current liability protections for investors voting on or buying shares at the time of a de-SPAC sufficient if some SPAC sponsors or advisors are touting SPACs with vague assurances of lessened liability for disclosures?
Do current liability provisions give those involved – such as sponsors, private investors, and target managers – sufficient incentives to do appropriate due diligence on the target and its disclosures to public investors, especially since SPACs are designed not to include a conventional underwriter at the de-SPAC stage?
Moreover, is it appropriate that the choice of how to go public may determine or be determined by liability rules? Read more.
