![]() ![]() A SPAC is a publicly traded, non-operating company that is used solely as a vehicle to acquire an operating target company in the future. SPAC deals have existed in various forms for more than 25 years. This advisory surveys the lay of the land regarding these risks and identifies practical suggestions about ways to anticipate and mitigate them. SPAC market participants-including sponsors, target companies, directors and officers on both sides of the transactions, and investment banks-should be aware of the enforcement and litigation risks involved. We expect this will continue and perhaps increase, particularly if retail investors get involved in SPAC IPOs. ![]() Inevitably, the growth in SPAC deal activity has attracted scrutiny from market regulators, including the US Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA), as well as private plaintiffs. In the first three months of 2021, there have been approximately 300 initial public offerings (IPOs) of special purpose acquisition companies (SPACs) that have raised $100 billion, which are significant increases over the record number of transactions and amounts raised in all of 2020. ![]() Subscribe to our "Biden-Harris Agenda" mailing list to receive our analyses. With deep insights into policies and policymakers, Arnold & Porter has established the Biden-Harris Agenda Resource Team to advise clients on the changing landscape. ![]()
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