The Latest SPAC News and Rumors: May 27th, 2021
Below is a daily summary of links to the latest SPAC news and rumors gathered across the web.
Chamath Palihapitiya and SEC Chairman Gary Gensler call for more oversight on SPACs
Wall Street’s New Cop Signals More Scrutiny of Crypto, SPACs
U.S. SEC Chairman Gary Gensler on Wednesday told lawmakers that SPACs and digital coins posed significant policy and investor-protection questions. He referred to SPACs as “blank-check IPOs.”
“Beyond the real demands on SEC resources, the surge of SPACs raises a number of policy questions,” said Gensler. “First and foremost, are SPAC investors being appropriately protected? Are retail investors getting the appropriate and accurate information they need at each stage — the first blank-check IPO stage and the second target IPO stage? Second, how do SPACs fit in to our mission to maintain fair, orderly and efficient markets? It could be the case that SPACs are less efficient than traditional IPOs.”
READSEC Chair Gives Testimony on SPAC and IPO Market
New U.S. Securities and Exchange Commission Chairman Gary Gensler asked Congress on Wednesday for increased funding so his agency can handle the rise of SPACs, cryptocurrencies and today’s “once-in-a-generation” level of traditional IPOs.
Gensler said the SEC’s enforcement division’s staff has decreased by 6%, while its corporate-finance unit has lost 20% of headcount in the past five years.
READSPACs Need More Oversight and Regulation
Chamath Palihapitiya: Like all IPOs, companies that go public via a SPAC are still a bet on the future. Some will succeed, some will fail. Everyone has to do homework and make independent investment decisions. There was a lot of froth in the SPAC market by the tail end of 2020 and the first quarter of 2021, but the market is now telling us something that we should listen to carefully. As of May 1, of 406 SPACs seeking transactions, 21% were below their standard IPO price of $10. And of 127 SPACs that had announced but not yet closed a transaction, 37% were also below $10 per share.
This price action tells me we need more oversight and regulation. It is time to improve the regulations around the SPAC ecosystem with clear and rigorously enforced standards, to push for high deal quality and appropriate investor protections.
READMeme Stocks, SPACs, Rebound: ‘Reddit Raiders Are At It Again’
The Role of Offshore in Chinese SPAC Transactions
The Maples Group has continued to see significant demand for Cayman Islands exempted companies to act as the issuer vehicle on SPAC transactions.
When it comes to China and Asia, Cayman Islands and British Virgin Islands structures continue to be a powerful tool providing Chinese and Asia-based SPAC promoters with the right corporate and governance framework that will allow them to attract and maintain investor funding, incentivize management and promote the objectives of key stakeholders.
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