U.S. SEC is reviewing SPAC filings, desires clearer disclosures -official By Reuters


© Reuters. FILE PHOTO: Seal of the US Securities and Exchange Commission

By Chris Prentice

WASHINGTON (Reuters) – An official with the US Securities and Exchange Commission said Thursday the agency is reviewing filings and looking for clearer information on special purpose entities (SPACs), as well as detailed concerns about fees, disputes and sponsorship compensation.

Officials at the US regulatory agency “review these records, seek clearer disclosure, and provide guidance to registrants and the public,” said John Coates, acting director of the SEC’s corporate finance division, in a statement.

The SEC is increasingly scrutinizing the increasingly popular SPACs, shell companies that use a listing to raise funds in order to acquire a private company with a view to listing it on the stock exchange.

SPACs are seen as a simpler alternative to traditional IPOs with less regulatory oversight.

Coates raised some of the SEC’s concerns about SPACs at an event earlier this week. The agency also warned dealmakers to follow regulatory requirements and last month launched an investigation into how underwriters deal with risk.

Claims that SPACs have less exposure to debt are “overrated at best,” said Coates, an issue raised by investor officials and other critics.

Participants may not have considered the legal implications of making performance projections as part of the SPAC process, Coates said. Any material misrepresentation is in violation of securities laws, he said.

Coates raised the prospect of formal rulemaking or possible legislative reform to allay concerns, but did not offer formal guidance or solicit public comments on the matter.

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