June 28, 2022

SEC’s SPAC Proposals: Commenters Weigh In

The comment period for the SEC’s SPAC rule proposals recently expired and as usually happens during in response to a major rule proposal, a flurry of comment letters from heavy hitters arrived during the days before and shortly after the expiration of the comment period.  Notable letters include those from:

– The ABA’s Federal Regulation of Securities Committee, whose 71-page letter raises a host of concerns about most of the provisions of the proposed rules.

– Robert Jackson & John Morley, whose lawsuit challenging Pershing Tontine’s compliance with the 1940 Act was arguably the first shot of War on SPACs, submitted an 8-page letter asking the SEC to amend its proposal to shorten the time period for completing a de-SPAC and to clarify the status of SPACs as investment companies under the 1940 Act.

– The Securities Regulation Committee of the New York City Bar Association, whose 9-page letter focuses primarily on concerns about the treatment of projections and the proposed expansion of the persons involved in de-SPAC transactions who would be considered statutory underwriters.

– SIFMA, whose 43-page letter is devoted entirely to objecting to the proposed expansion of the persons and entities who would be considered statutory underwriters in connection with de-SPAC transactions

– NASAA, whose 6-page letter is generally supportive of the SEC’s proposals, but also recommends additional disclosure enhancements and calls for more restrictions on the use of projections.

– The NVCA, whose 4-page letter focuses on the role that SPACs play in facilitating access to the public markets by venture backed companies & offers somewhat cringeworthy praise for their role in financing climate change technologies.

– The SPAC Association, whose 6-page letter basically says that the SEC”s proposals are ugly & their mother dresses them funny.

In addition, most major law firms have also weighed in with comment letters of their own, as have a number of academics. It looks like the SEC is going to take its time digesting these comments, because in the new edition of the SEC’s Reg Flex Agenda, the SPAC rule proposal remains classified as being on the “Proposed Rule Stage” of the process with no date set for final action.

John Jenkins