By Katanga Johnson
WASHINGTON -The U.S. Securities and Exchange Commission’s chairman said on Thursday the regulator is considering toughening rules around how underwriters, boards of directors and sponsors of Special Purpose Acquisition Companies (SPAC) structure fees, issue projections and disclose conflicts.
SEC chief Gary Gensler, in a keynote address to investor advocates, said the new rules would be intended to strengthen obligations of “gatekeepers” who facilitate fundraising at earlier stages of a blank-check company before it seeks an initial public offering (IPO).
SPACs – Wall Street’s biggest gold rush of recent years – are listed shell companies that raise funds to acquire a private company and take it public, allowing targets to sidestep the more onerous regulatory checks of an IPO. The SEC is seeking to better scrutinize the SPAC deals market and boost SPAC investor protections.
“The investing public may not be getting like protections between traditional IPOs and SPACs,” Gensler said at a meeting of the Washington-based Healthy Markets Association, underscoring a concern around how SPACs may be priming the market as they target a public offering.
“Many gatekeepers carry out functionally the same role as they would in a traditional IPO but may not be performing the due diligence that we’ve come to expect,” Gensler added.
The SEC in September expanded its crackdown on the SPAC sector, telling top auditors https://www.reuters.com/business/finance/exclusive-us-sec-cracks-down-second-time-spac-equity-accounting-treatment-2021-09-28 of these companies to account more strictly for public shares in these shells. Reuters has previously reported https://www.reuters.com/article/us-usa-sec-exclusive-idCAKBN2CE2IM that the SEC is looking into changes around projections as well as addressing gatekeepers’ liability.
(Reporting by Katanga Johnson in Washington, Editing by Will Dunham and Franklin Paul)
