SEC official warns of SPAC risks
Bloomberg
Creating SPACs and taking them public is "not a free pass" to avoid federal securities laws, SEC Division of Corporation Finance Acting Director John Coates said.
His statement Thursday on SPACs and liability risks related to IPOs was prompted by what he said was an unprecedented surge in special purpose acquisition companies.
"Concerns include risks from fees, conflicts and sponsor compensation, from celebrity sponsorship and the potential for retail participation drawn by baseless hype, and the sheer amount of capital pouring into the SPACs," Mr. Coates said.
SEC officials will be looking closely at SPAC filings and asking for clearer disclosure, he added. They are also considering next steps, including rule-making to "recalibrate" the applicable definitions, and guidance on how safe harbors apply, if at all.