SPAC Transaction Explosion Drives SEC Enforcement Focus

In the face of volatile markets and a global pandemic, an old capital markets vehicle has been taking the markets by storm: special purpose acquisition companies (SPACs). Although SPACs have been around for many years, the volume and profile of these deals have exploded in the past 12 months, and regulator interest is expected to increase proportionately. 

Indeed, the Securities and Exchange Commission (SEC) has signaled that it intends to enhance its scrutiny of SPAC transactions and resulting public operating companies. Just last week, the SEC's Division of Enforcement reportedly sent requests to various financial institutions focused on their SPAC dealings.¹  According to press reports, Enforcement staff are seeking information about those firms' deal fees, deal volumes and internal controls related to SPACs. And earlier this week, the SEC's Division of Corporation Finance and Office of the Chief Accountant each issued statements underscoring the need for SPACs