The Recent Surge of SPACs Sparks Heightened SEC Review

According to statements by John Coates, the Acting Director of the Division of Corporation Finance at the Securities and Exchange Commission, the unanticipated wave of Special Purpose Acquisition Companies, or SPACs, has sparked unprecedented scrutiny, suggesting that it may be time to revisit a review as new issues with both standard and innovative SPAC structures keep surfacing. Simply described, a SPAC is a “shell company with no operations.”— also known as blank check companies. In contrast to SPACs between 2009 and now, when about 10% liquidated due to failure to find and acquire a target within a period of two years, most SPACs since 2009 have gone on to identify acquisition candidates.