The proposals include increased disclosures regarding conflicts of interest, insider compensation, and certain costs and equity dilution involving SPAC transactions. A proposal to clarify the lack of protection for SPACs from safe harbor security laws as well as who is considered an underwriter in SPAC mergers was also raised by regulators.
In an effort to ensure participants in de-SPAC transactions undertake the requisite due diligence, the SEC will require target companies (those being acquired by the SPAC) to sign as co-registrants when a SPAC files an S-4 regarding the proposed merger, thereby subjecting the target company to liability in the event of faulty disclosures. Furthermore, the SEC will require SPACs to affirm the fairness of the merger and their financials to all investors. The proposal would also require SPACs to demonstrate they are not investment companies, which are subject to stricter regulations. The proposal has received the support of the SEC, save for one lone dissenter who voiced concerns that the proposal “seems designed to stop SPACS in their tracks” by imposing burdens “designed to damn, diminish and discourage SPACs.”
Given the SEC’s focus on ESG and cybersecurity risks, all registrants should prepare for granular examinations in which firms’ ESG and cyber security operational risk disclosures, practices, policies, and procedures will be scrutinized. It bears noting that these are not the only areas the Division focuses on. While these priorities are what primarily drive the Division’s examinations, the scope of any examination is determined through a risk-based approach.
Director/Officer | Role | Company |
Eric A. Alexander | Former CFO | 1 Global Capital, LLC |
Scott A. Merkelson | Former Director of Bus. Dev. | 1 Global Capital, LLC |
Fernando Passos | Former EVP of Finance | IRB Brasil Resseguros S.A. |
Anthony M. Baker | President, CEO | Island Capital Inc. |
Amount | Director/Officer | Role | Company |
$2,819,692.00 | Andrew J. Chapin | Former CEO | Benja Inc. |
$100,000.00 | John W. Gunn | Chairman | Global Investment Strategy UK Ltd. |
Source: U.S. Securities and Exchange Commission