ICYMI: SEC proposes new rules, heightened disclosures for SPACs
Now, the SEC is starting the process of taking action on SPACs, this time in the form of a rule change proposal. The new SPAC rules would significantly heighten disclosure standards for the process, making the SPAC process closer to the IPO process.“For traditional IPOs, Congress gave the SEC certain tools, which I generally see as falling into three buckets: disclosure; standards for marketing practices; and gatekeeper and issuer obligations.
The proposal would require similar financial statement requirements to an IPO involving a public shell company and a private operating company. It will also add specialized disclosure requirements on sponsors, projections, conflicts of interest, SPAC target IPOs and dilution that must be disseminated to investors 20 days before a vote to approve the transaction. Any sale of a non-shell company to a shell company’s shareholders would be subject to the Securities Act.
Gensler said in a statement that the proposal stems from the understanding that functionally, SPACs are being used as an alternative to a traditional IPO. Though much of the Commission backs the proposal, crypto-friendly Commissioner Hester Peirce published atoday. While she said she would support heightened disclosures, she feels the current proposal goes too far.