SEC Proposed New Rules To More Tightly Regulate SPAC Activity

On Wednesday, March 30, 2022, the Securities and Exchange Commission (SEC) proposed new rules and amendments to enhance disclosure and investor protection in initial public offerings (IPOs) and in business combination transactions, or de-SPAC transactions, by special purpose acquisition companies (SPACs).

These proposed rules came out as a result of the SEC's long-term effort to tighten its regulations over SPACs since the significant increase in the use of SPACs to effect listings by private entities. Although the SPAC structure has existed since the 1990s, its recent boom and the increasing use of de-SPAC transactions as a way for private companies to go public in the U.S. market without facing much of the same regulatory scrutiny surrounding a traditional public offering has concerned certain market observers.