Securities and Exchange Commission (SEC) Chair Gary Gensler seems poised to start regulating blank check companies with a new spate of cases against them from authorities, the Financial Times (FT) reported Thursday (Dec. 9).
Speaking on Thursday, Gensler had the most detail yet on recommendations on overseeing special purpose acquisition companies (SPACs).
Gensler has reportedly asked SEC staff to get recommendations on how to make sure SPAC investors get the same protections they would with a regular listing.
There have been several investigations of SPACs recently, with regulators concerned that the deals might have gotten through without much scrutiny like is usually needed.
For instance, Digital World Acquisition Corp — a SPAC merging with Donald Trump’s entertainment startup, Trump Media and Technology Group — has said the SEC is looking into its plans. Lucid Motors, an electric car group boasting one of the biggest SPAC deals to date, is also being investigated.
Gensler’s goal is to seek guidance on how to set requirements for disclosures from SPACs in stone. There is an “inconsistent and differential disclosure” among several parties in the deals, he says, which includes retail investors sometimes not getting the right information about the dilution of shares.
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Gensler also thought there was an issue with SPAC sponsors “priming the market” with insufficient statements ahead of the mergers, with investors sometimes making decisions based on “incomplete information” or hype.
While SPACs have been popular over the past few years, critics have had questions about whether young companies can present good projections to investors.
Amex Global Business Travel (GBT) recently announced a SPAC deal, with PYMNTS writing that the company would be going through with a combination deal with Apollo Strategic Growth Capital.
See also: Amex Global Business Travel to Go Public in SPAC Deal
The deal would potentially create the world’s biggest publicly traded business-to-business (B2B) travel platform, and the company would be valued at $5 billion.
GBT CEO Paul Abbott said the company wanted to provide “unrivaled value, choice and experiences to our customers and partners.”
