SEC considers new investor protections for SPACs

  • Date: 27-May-2021
  • Source: CNBC
  • Sector:Economy
  • Country:Middle East
  • Who else needs to know?

SEC considers new investor protections for SPACs

Amid a boom in special-purpose acquisition companies, better known as SPACs, the Securities and Exchange Commission is considering new protections against the investment vehicles. In prepared remarks ahead of a Wednesday hearing with the House Appropriations Committee, SEC Chairman Gary Gensler said that the agency is devoting significant resources to addressing emerging issues in a wave of traditional initial public offerings and SPACs. Some of the resources will be devoted to new ideas and recommendations around SPACs and how to appropriately protect retail investors who are interested in jumping into the investment. SPACs have taken off like wildfire in the last six months, said Gensler Wednesday during the hearing. "There are some real questions about who is benefitting and investor protection," he said. So far this year, there have been 329 SPACs that have raised more than $100 billion, according to SPAC Research. Last year, there were 248 SPACs that raised more than $83 billion, and in 2019 59 SPACS raised more than $13 billion. SPACs, also known as blank-check companies, work like this: Capital is raised in an initial public offering without a company attached. Then, the IPO finds a private company and merges with it to take it