Tougher SPAC Disclosure Rules Endorsed by SEC Advisory Group

A group of executives and academics that advises the U.S. Securities and Exchange Commission wants better SPAC disclosures -- the latest sign that tougher rules are coming for booming blank-check companies. 

The recommendations from the SEC’s investor advisory committee will likely help agency staff as they craft new regulations for special purpose acquisition companies, which have drawn bipartisan criticism from lawmakers after attracting a record $80 billion last year. The agency, which is run by Gary Gensler, said in June that it planned to propose rule changes.

The advisory group recommended Thursday that the SEC conduct and publish an analysis of the SPAC industry and “more intensively” regulate listings by requiring: 

  • Increased enforcement of disclosure rules for SPAC sponsors’ expertise, contributions and conflicts of interest.
  • Plain-English disclosures on the financial incentives for various participants.
  • Clear descriptions of the SPAC process and time lines with details of rules for how shareholders can vote for a deal.
  • More information on the target and opportunity search process, as well as related risks.
  • More information about the due diligence the sponsor will agree to related to accounting practices.

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