SPAC Market Trends and New Developments
Recent SPAC Trends
Challenges from the SEC
with a more extensive regulatory review of proxy and registration statements.
The SEC plans to increase disclosure requirements for SPACs which have been the subject of recent staff guidance and statements, as well as recommendations by the SEC’s Investor Advisory Committee. Areas to be covered likely include fees, projections, dilution and potential conflicts of interest between sponsors and investors, marketing practices and gatekeeper obligations.
Proposed Legislation Relating to SPACs
Two pieces of legislation aimed at imposing additional regulations on SPACs were introduced on November 9, 2021 in the U.S. House of Representatives and referred to the House Committee on Financial Services: (i) “Holding SPACs Accountable Act of 2021,” which was proposed to amend the securities laws to exclude all SPACs from the safe harbor for forward-looking statements (Safe Harbor). Currently, only forward-looking statements made in connection with the offering of securities by a blank check company are excluded from the Safe Harbor; and (ii) “Protecting Investors from Excessive SPACs Fees Act of 2021,” which was proposed to amend the Investment Advisers Act of 1940 (40 Act) and the Securities Exchange Act of 1934, as amended (Exchange Act), to prevent investment advisers, as defined by the 40 Act, and brokers and registered representatives of brokers, as defined by Exchange Act, from recommending SPAC securities to a non-accredited investor unless the SPAC’s promote or other economic compensation is less than 5% or the SPAC makes certain disclosures mandated by the SEC. The proposed legislation is currently pending.
Conclusion: 2022 Predictions
SPAC IPO activity may rebound to some extent in the next two quarters. Therefore, we expect to see continued growth with SPAC activity, particularly as the SPACs look to recoup from the recent policy challenges they’ve faced and gain exposure as they continue to searching acquisition targets in the market.
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About the Author
Yarona Liang Yieh is a Counsel to Ortoli Rosenstadt LLP and a member of the firm's Asia Practice Group with fifteen years experience in U.S. securities law and cross-border capital market practice. She represents domestic and foreign issuers, underwriters, placement agents and other parties in all aspects of corporate and securities law, including IPOs, SPACs, secondary offerings, PIPE financing and public company on-going regulatory compliance.