Senate Dems targeting SPAC magnates
Emily McCormick gives an in-depth analysis of her latest hot take, which aims at Elizabeth Warren and fellow Democrats' efforts to challenge SPACs as concerns over insiders taking advantage of regulatory loopholes at the expense of shareholders persist.
Video Transcript
- And I know you're watching, Emily. One of those areas I mentioned. And that's SPACS.
- That's right, Julia. I'm also taking a look at the deal making space with SPACS specifically. And how more government scrutiny has been taking place about these blank check companies? And what this actually might mean in terms of regulation down the line?
Because yesterday, we saw a group of Senate Democrats. And members of the Senate Banking Committee that included Elizabeth Warren. And they wrote a letter to executives behind major SPACS questioning, whether these vehicles might actually be exploiting regulatory gaps and harming investors.
Now we've already seen more than 400 SPACS come to market in 2021. That's already an annual record according to SPAC research. And based on this letter, this was sent a SPAC leaders, including Cantor Fitzgerald, CEO Howard Lutnick, the CEO of Fertitta entertainment, and Chamath Palihapitiya who, of course, is the CEO of the social and capital partnerships.
Information requested from this letter is to be provided by October 8. And essentially what these senators were saying based on that letter is that, quote, we are concerned about the misaligned incentives between spacs creators and early investors on the one hand and retail investors on the other.
And of course, this isn't the first time that we've been seeing DC step up its regulatory scrutiny here. SEC chairman Gary Gensler has also made clamping down on SPACS. A major tenet of his agency so far.
And we know that one of the things that he'd been working on is that how SPACS should account for these instruments that they call warrants, which can be converted into stock later. And that's something that really had put a crackdown on the number of SPACS that we saw earlier on in the spring.
So I think guys it's going to be really interesting to see now that we have an additional set of senators here really coming after these deals, whether this further puts a chill on this market.
