Bloomberg Law
April 1, 2022, 4:55 PM

ANALYSIS: SEC Proposes to Squeeze SPACs With New Rules

Preston Brewer
Preston Brewer
Legal Analyst

Blank check companies have a checkered past. Their reputation became sullied by scandal in the early 1990s, most often owing to fraud in penny stocks. In 1992, the Securities and Exchange Commission acted to curb abuse by mandating the creation of an escrow account to hold investor funds under a new Rule 419. Eschewed for years owing to their bad reputation, this reform helped set the stage for their redemption in the form of special purpose acquisition companies (SPACs).

SPACs began establishing a track record of success, leading to more and more reputable professionals and savvy investors becoming involved. ...

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