SEC's Proposed SPAC Rules: A Closer Look at the Proposed Rules

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On March 30, 2022, the commissioners of the Securities and Exchange Commission (“SEC”) approved much-anticipated proposed rules relating to special purpose acquisition companies (“SPACs”). The proposed rules cover a wide range of topics, including expanding underwriter liability for disclosures in connection with de-SPAC transactions, target company and officer and director liability for such disclosures and expanding and revising disclosure requirements applicable to SPAC IPOs and de-SPAC transactions. While some of the proposed rules simply codify existing SEC staff positions and guidance or standard SPAC industry practice or are repetitive of existing rules, others are likely to have substantive impacts on SPACs, SPAC sponsors, SPAC IPO underwriters, private companies seeking to go public via de-SPAC transactions and other participants in de-SPAC transactions. Whether intentional or unintentional, likely consequences of the proposed rules, if adopted as is, are to defer access by some companies to capital markets for an extended period of time, reduce capital formation and innovation in the U.S. and deny ordinary investors access to investment opportunities not otherwise available to them.