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There is still a simple solution to the "SPAC problem" - don't let them list. A SPAC is effectively (and I'm simplifying here for brevity) like a Private Equit

by MR4D 3y ago

There is still a simple solution to the "SPAC problem" - don't let them list. A SPAC is effectively (and I'm simplifying here for brevity) like a Private Equity fund. However, those are limited to accredited investors, and the general public can't buy into them. SPACs could (should?) be limited in the same form. By prohibiting them from listing, it's the smallest regulatory change that solves the issue of unknowing investors buying something speculative without knowing it's true risks.

sgjohnson 3y ago
> By prohibiting them from listing, And you've killed SPAC as a concept.
- yardie 3y ago
  Maybe it's for the best.
- MR4D 3y ago
  I think that's what the debate is essentially about. Private equity funds are basically unlisted SPACs, and have been doing this forever. To me this is one of the key differences between sophisticated and unsophisticated investors, and knowing how to do due diligence is really key.
nordsieck 3y ago
> There is still a simple solution to the "SPAC problem" - don't let them list. OK - but how are you going to discriminate between SPACs and other c-corps? I don't think a porn style "I know it when I see it" test is going to work here.
- nocoiner 3y ago
  It’s actually pretty easy, no? A SPAC has requirements that it has to meet - no operating business, only nominal assets, a limited period of time in which it must transact. But like another poster observed, not letting a SPAC list completely obviates the sole purpose of a SPAC (which I personally think would be an excellent outcome).
- MR4D 3y ago
  The SEC already does. [0] [0] - https://www.sec.gov/corpfin/disclosure-special-purpose-acquisition-companies https://www.sec.gov/corpfin/disclosure-special-purpose-acqui...
boeingUH60 3y ago
> don't let them list. How exactly do you intend to do that? Remember the law is like code, not something you can rearrange on a whim. There's no legal distinction of a SPAC. It's just a company like any other listing on the public markets. The better solution is to increase reporting and listing requirements for the companies they're merging with. The merger process should become exactly as it is with traditional IPOs; S-1 filings, roadshows, lockup periods, etc.
- deleted 3y ago
  [deleted]
- MR4D 3y ago
  Listing requirements are managed by the Exchanges + the SEC (and Congress if needed). One example of SEC proposed rules is here: [0] It's easy to do. [0] - https://www.sec.gov/files/33-11048-fact-sheet.pdf https://www.sec.gov/files/33-11048-fact-sheet.pdf

by MR4D 3y ago

sgjohnson 3y ago

> By prohibiting them from listing, And you've killed SPAC as a concept.

yardie 3y ago
Maybe it's for the best.
MR4D 3y ago
I think that's what the debate is essentially about. Private equity funds are basically unlisted SPACs, and have been doing this forever. To me this is one of the key differences between sophisticated and unsophisticated investors, and knowing how to do due diligence is really key.

nordsieck 3y ago

> There is still a simple solution to the "SPAC problem" - don't let them list. OK - but how are you going to discriminate between SPACs and other c-corps? I don't think a porn style "I know it when I see it" test is going to work here.

nocoiner 3y ago
It’s actually pretty easy, no? A SPAC has requirements that it has to meet - no operating business, only nominal assets, a limited period of time in which it must transact. But like another poster observed, not letting a SPAC list completely obviates the sole purpose of a SPAC (which I personally think would be an excellent outcome).
MR4D 3y ago
The SEC already does. [0] [0] - https://www.sec.gov/corpfin/disclosure-special-purpose-acquisition-companies https://www.sec.gov/corpfin/disclosure-special-purpose-acqui...

boeingUH60 3y ago

> don't let them list. How exactly do you intend to do that? Remember the law is like code, not something you can rearrange on a whim. There's no legal distinction of a SPAC. It's just a company like any other listing on the public markets. The better solution is to increase reporting and listing requirements for the companies they're merging with. The merger process should become exactly as it is with traditional IPOs; S-1 filings, roadshows, lockup periods, etc.

deleted 3y ago
[deleted]
MR4D 3y ago
Listing requirements are managed by the Exchanges + the SEC (and Congress if needed). One example of SEC proposed rules is here: [0] It's easy to do. [0] - https://www.sec.gov/files/33-11048-fact-sheet.pdf https://www.sec.gov/files/33-11048-fact-sheet.pdf