May. 18, 2022
Appended and update from 05/11/22 I had downloaded, but have not read through all 372 pages yet. I have found these comments to be aligned with what really needs to be considered more before final rule. The SECs proposed rules would essentially put SPACs on an even playing field with more traditional IPOs. While I'm not a fan of all the proposed regulations, there are some very strong benefits from some of the proposals. These proposed regulations would certainly help to bring more transparency and accountability to the entire SPAC market. And the proposals mentioned above would allow us to have important information we'd like to know as SPAC investors. However, one regulation I'm not a fan of is the underwriter liability. Underwriters help a SPAC (or any company) go public by guaranteeing a minimum amount of money is raised. In return, underwriters collect a fee. Typically, the fee is 7% for traditional IPOs and up to 5.5% for SPACs but typically much less. And usually the IPO process is where the underwriters involvement and liability ends. But the SEC wants to make the underwriters liable for the company the SPAC team brings public. Keep in mind, this event will likely happen over a year later. The underwriter has no control at all over the outcome. The proposed regulations are tying liability to underwriters to promote due diligence during the de-SPAC transaction. This would be the case even if the underwriter has no part in this transaction. This would be the equivalent of selling a car to someone, and then being held responsible for an accident they cause years later. Why should underwriters be on the hook for the company a SPAC brings public? It doesn't make any sense. Thank you