SEC Warns SPAC Investors About ‘Scarcer’ Target Companies

May 25, 2021, 4:55 PM

Wall Street’s regulator on Tuesday issued another buyer-beware alert about investments in the blank-check companies that soared in popularity in 2020 and early 2021.

Investors need to understand the terms of the investments and rely on the management teams that form special purpose acquisition companies, or SPACs, to seek private companies to acquire and take public, the Securities and Exchange Commission’s Office of Investor Education and Advocacy said. While the SPAC may identify a specific industry or business to acquire, it is not obligated to pursue a target in the identified industry, the office warned.

“With an increasing ...

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