SEC Proposes Major Changes To SPAC Rules

The Securities and Exchange Commission ("SEC") recently proposed rules that would impose significant new requirements that affect disclosure and liability in initial public offerings by special purpose acquisition companies ("SPACs") and in their later business combination transactions with private operating companies ("de-SPAC" transactions).¹ Ostensibly, the SEC proposals are intended to better align the requirements of de-SPAC transactions with those for IPOs. 

The proposals significantly change the regulatory regime for SPACs and others as follows.

1. Underwriter Liability at de-SPAC Transaction for SPAC IPO Underwriters. The proposals would add a rule that deems underwriters in a SPAC IPO to be a "statutory underwriter" in the de-SPAC transaction if it takes steps to facilitate the de-SPAC transaction or related financing. This effectively imposes liability on those IPO investment banks for the de-SPAC transactions and forces them to independently