Continuing the Conversation - Recent Public and Private Actions Against SPACs
The frothy SPAC market fizzled out in April 2021. And following a spate of public statements from SEC leadership, as well as March 2021 reports that the agency is asking a number of Wall Street banks—on a voluntary basis—for more information on their SPAC practices, increasing discussion exists around how the regulator may take action if it believes management stumbled in the launch, listing, or de-SPAC transactions. At present, the SEC appears to be investigating at least four different SPAC combinations with some common threads. These cases and others focus on alleged misrepresentations of possible failures to conduct adequate or appropriate diligence. Here, we offer a view into what may lie ahead in the regulator’s Division of Enforcement by looking back at a few recent public and private actions involving SPACs and their sponsors.