In a decisive 3-2 vote along party lines, the U.S. Securities and Exchange Commission (SEC) has unveiled stringent measures to enhance oversight of special-purpose acquisition companies (SPACs). The 581-page rule aims to address concerns surrounding conflicts of interest, insider compensation, and various fees tied to SPAC deals.
Heightened Disclosure Requirements
Under the new rules, companies engaging in SPAC offerings must provide increased disclosure on conflicts of interest, insider compensation, and fees related to equity dilution. The SEC also clarified that SPACs will no longer enjoy a legal safe harbor that previously reduced liability for forward-looking projections.
Closing the Gap with Traditional IPOs
SEC Chair Gary Gensler emphasized that the rules are designed to align SPAC oversight with traditional initial public offerings (IPOs). The move seeks to ensure that investors in SPACs receive the same time-tested protections as those in traditional IPOs.
“IPOs are IPOs, and as Aristotle once said, ‘treat like cases alike,'” Gensler affirmed.
Stricter SEC Rules Raise The Bar For SPAC Offerings : Dissenting Voices
The SEC’s decision faced opposition from Republican commissioners Hester Peirce and Mark Uyeda. They expressed concerns that the new rules could stifle market participants’ interest in pursuing IPO alternatives, ultimately leading to fewer public companies.
