January 25, 2024

Waxing Philosophical: Treating Like as Like When it Comes to SPACs?

In its summary of the SEC’s SPAC rule changes, the Mayer Brown Free Writings & Perspectives blog notes:

During the open meeting, Chair Gensler citing Aristotle, noted yet again a desire to treat “like as like” and, in that vein, to consider SPACs and the related de-SPAC transactions as alternative IPOs that should be subject to investor protections that are available to investors in traditional IPOs — including as it relates to disclosures and gatekeeper protections. This ignores that the business combination is subject to a state law process applicable to business combinations and that boards of directors have duties. And, of course, one wonders, is it truly “like as like” when companies that begin life as SPACs even once subject to the new, enhanced disclosure requirements will not be treated (once they cease being “shell companies” or former shell companies) like other filers? What would Aristotle have thought about this? A rhetorical question certainly since the great philosopher probably would not have known what to make of our securities laws.

As the blog notes, the final rules take into account only some of the concerns raised during the public comment period. The Commission determined not to adopt the controversial Rule 140a, which related to statutory underwriter status, and an Investment Company Act safe harbor. Instead, the Commission provided guidance on Investment Company Act and underwriter status.

– Dave Lynn