Gary Gensler Comes Not To Mourn SPACs But To Bury Them

The special-purpose acquisition company is already on life support: Their numbers dwindling, their suitors fleeing, their supposed beneficiaries suing, their appeal genrally fading. Given the sorry state of the blank-check industry, perhaps it’s for the best that Gary Gensler is taking some time out of his busy schedule to make good on his promise and just put it out of its misery.

The Securities and Exchange Commission advanced a set of rules Wednesday that, if implemented, would make it harder for SPACs to raise money from investors and execute mergers. Its goal is to force the vehicles to meet similar regulatory standards as initial public offerings, though critics accused the agency of aiming to end their use altogether…. “They have on average been pretty costly and not performed up to the marketing,” Mr. Gensler, who was appointed by President Biden, told reporters Wednesday. “There’s an awful lot of fees in here for the sponsors. There’s an awful lot of fees for bankers and lawyers as well.”

We’re sorry, SPAC stans, but he noticed.

Under the proposal the SEC is considering, blank-check companies would have to disclose information about their sponsors’ compensation as well as the dilution that shareholders might suffer if an acquisition is completed…. Companies acquired by SPACs, as well as their officers and directors, would become liable for misrepresentations or omissions in the merger documents that SPACs file with the SEC…. SPACs and their buyout targets would be required to disseminate the required information disclosures to investors at least 20 days before any vote by shareholders on whether to approve an acquisition.

The proposal would also tighten rules around the forward-looking projections that SPACs are currently allowed to tout without running afoul of the SEC, to address concern that the entities often woo investors with unrealistic growth forecasts.

In other words, literally everything that makes a SPAC worth pursuing. As the lone Republican left on the SEC complained, “The typical SPAC would not meet the proposal’s parameters without significant changes to its operations, economics and timeline.” Uh, Hester, aren’t you opposed to it?

SEC Proposes New Disclosure Requirements for SPACs [WSJ]

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