Commissioner Peirce Challenges the SEC's "Newfound Hostility" Towards SPACs

SEC Commissioner Hester M. Peirce raised concerns about the SEC's recent treatment of a SPAC registration statement.

In a published statement, Ms. Peirce asserted that the SEC's decision to not declare a "routine" registration statement effective "makes sense only in the larger context of the Commission's newfound hostility to SPAC capital formation." She chided the SEC for both failing to declare the registration statement effective and for failing to explain the decision not to do so.

She stated that the SEC's conduct may reflect the recent proposal introduced by the SEC that would treat certain SPACs not falling within a safe harbor as "investment companies" (see previous coverage). She pointed out that the SPAC in this case was communicating with the SEC for months regarding amendments to filings, and instead of getting the response "that virtually everyone gets at this stage of the process," the SPAC instead may have been a victim of "the parameters of a non-exclusive safe harbor that [has] not yet been adopted."

Ms. Peirce stated that "the Commission cannot turn on a dime and start treating SPACs that do not meet an arbitrarily determined timeline as investment companies." She further noted that the result of this failed SPAC merger, namely a registration statement being deemed ineffective without an explanation, "appears to be the death knell of the SPAC, which robs the investors of the opportunity to decide whether they approve the merger agreement." She urged the SEC to engage its registrants with good faith or else risk the credibility of the agency.