Perfectly calibrated to slap an exclamation point on last Wednesday’s 581-page SPAC release (see this PubCo post), this new SEC Order, posted the following day, reflects settled charges against Northern Star Investment Corp. II, a SPAC, for misleading statements in its SEC filings in connection with its SPAC IPO and failed de-SPAC transaction. In the SPAC release, the SEC noted concerns from commentators regarding the adequacy of the disclosures provided to investors in SPAC IPOs and de-SPAC transactions. In this case, the SEC charged that Northern Star stated in its SEC filings that, prior to filing its S-1 for its IPO, it had had no substantive discussions with any potential target; in reality, however, Northern Star had had several discussions with the ultimate target regarding a potential SPAC business combination. According to the Director of the SEC’s Philadelphia Regional Office, “Northern Star’s failure to disclose discussions with its merger target kept investors in the dark about its future plans, information that would have been important in deciding whether to invest in this SPAC….Given that the purpose of a SPAC is to identify and acquire an operating business, SPACs should be transparent about any pre-IPO discussions with potential acquisition targets.” Northern Star was ordered to pay a civil money penalty of $1.5 million for violation of the antifraud provisions of the Securities Act. READ MORE
SEC's blank-check rules coincide with market slump
The SEC approved a new set of rules for special-purpose acquisition companies (SPACs) this week, long after the damage was done by the recent mania.
Why it matters: It remains to be seen what effect they'll have on the future of blank-check companies.
The big picture: Following the SPAC mania of 2020–2021, the SEC proposed rules nearly two years ago to curb what it saw as loopholes in regulations for blank-check companies. READ MORE
Insurers win partial victory in SPAC D&O case
A Delaware Court has issued a partial victory to insurers in one of the first directors and officers liability insurance coverage cases related to special purpose acquisition companies to reach a ruling.
Social Capital Hedosophia Holdings Corp. III was a publicly traded SPAC that merged with privately held Clover Health Investments Co. in January 2021, according to the Feb. 6 ruling by the Delaware Superior Court in Wilmington in Clover Health Investments Corp. et al. v. Berkley Insurance Co. et. al. READ MORE
SPACs: Can They Truly Benefit Entrepreneurs?
Special purpose acquisition companies (SPACs) have been making headlines among business leaders and in the financial world ever since several high-profile IPOs were achieved with their assistance. Some of the most anticipated IPOs of the last two years have been facilitated by SPACs, including the stock market debuts of Virgin Galactic Holding, Nikola Corporation, Opendoor Technologies Inc., DraftKings Inc. and BuzzFeed. READ MORE
What the Heck is a SPAC and Why Do I Care?
Private business owners have surely heard the term “SPAC” a lot over the last few years. For professional advisors and non-transaction lawyers, the term may be ubiquitous, but still somewhat of a mystery. They may be wondering, what is a SPAC, why are so many people talking about them, and do they have anything to do with me or my clients? READ MORE
SPAC Disclosure, Marketing and Gatekeeping in 2022
We reported last year that unprecedented SPAC deal volume signaled an increased risk for disputes given their unique structure, including risks associated with disclosure requirements, material non-public information, valuation, and conflicts of interest. Our assessment proved prescient, as the SEC began to flex its enforcement muscles vis-à-vis SPACs as the year progressed, and took specific notice of potential asymmetries between SPACs and traditional IPOs that may form the basis for disputes in 2022. READ MORE
SPAC Market Struggling to Find Footing
With sky high redemptions, prices stuck well below NAV, and PIPEs not getting done, the SPAC market is not in a happy place. But, at least DWAC is crushing...? READ MORE
SPAC Mergers are Facing Uphill Battles
Today M3-Brigade Acquisition II Corp. (MBAC) became the latest SPAC to call off a merger when it cancelled its planned combination with Syniverse, marking the 9th deal to be called off since December. The company noted that due to the amount of redemption requests it received that they wouldn't be able to meet the minimum cash requirements for the deal.
Given that Syniverse is backed by Carlyle and counts other major players as investors, it was slightly surprising that more wasn't done to get this deal over the finish line, particularly as they were seemingly close with a shareholder vote scheduled for today. READ MORE
SEC Leans on SPACs for Detailed Disclosures of Risk, Controls
Wall Street’s top regulator promises to issue new, tougher rules for SPACs, but the agency already has ramped up its scrutiny of the blank-check companies that became market sensations in 2020.
The Securities and Exchange Commission is questioning growth projections, asking for details about risks, and seeking more information about the internal controls of individual special purpose acquisition companies, according to comment letters it has sent to companies. READ MORE
Whistleblowers Are Key to Protecting SPAC Investors
Market enthusiasm for special purpose acquisition company (SPAC) investments has reached unprecedented heights during the last two years, stoking the concern of the Securities and Exchange Commission as it seeks to protect investors in these transactions.
With stepped up SEC enforcement, the timing is ripe for whistleblowers with knowledge of securities law violations to consider providing the SEC with information about potential SPAC securities law violations. Whistleblower’s can be eligible to receive substantial financial awards for providing useful information to the SEC, but would be well-advised to speak in advance with experienced whistleblower counsel. READ MORE
Is The SPAC Boom Fizzling Out?
SPACs may be fizzling out.
Since February 2021, when the SPAC (special-purpose acquisition company) craze was booming, a market selloff has wiped out about $75 billion of the value of companies that went public using SPACs, according to a Dow Jones Market Data analysis of figures from SPAC research. The analysis examined a group of 137 companies that went public using SPACs by mid-February this year. According to the analysis, these companies have lost 25 percent of their combined value since then. Over the same period, the Dow Jones Industrial gained 13 percent. READ MORE
The once ultra-hot SPAC market has pretty much crumbled
The once red-hot SPAC market continues to be touch and go, at best.
Third quarter to-date, an average of six SPAC [special purpose acquisition company] IPOs have raised $1.2 billion in total capital each week, according to fresh data out of Goldman Sachs on Thursday. That pace is down sharply from the boom period seen in the first quarter, when an average of 21 SPACs raising $6 billion in capital came to market each week. READ MORE
How the SPAC Frenzy Is Conquering the Clean Energy World
Transactions involving a Special Purpose Acquisition Company (SPAC) accounted for more than 50% of new publicly listed US companies in 2020. Described as the new way to go public, SPAC transactions have proven to be an effective way to raise capital. SPACs are used in a variety of sectors and the clean energy space is no exception, as the number of renewable energy SPACs keep growing. This article will briefly explain why “green SPACs” became so popular and why, despite the challenges in the SPAC market, the green SPAC frenzy is likely to continue. READ MORE