SEC Chairman Highlights Continued Scrutiny of SPACs


Mike Esposito and Dan Campbell

Publish Date




  • Compliance

In prepared remarks before the Healthy Markets Association Conference delivered on December 9, 2021, the Securities and Exchange Commission (SEC) Chairman addressed special purpose acquisition companies (SPACs) and laid out strong signals that he will push for tougher rules in the space.

Noting the existing requirements around traditional initial public offerings (IPOs), Chairman Gensler stated that “Currently, I believe the investing public may not be getting like protections between traditional IPOs and SPACs.” He also raised concerns with how SPACs may not provide sufficient investor protections and that the SEC intends to address them through four areas:

  • Disclosures: “I’ve asked staff to serve up recommendations about how investors might be better informed about the fees, projections, dilution, and conflicts that may exist during all stages of SPACs, and how investors can receive those disclosures at the time they’re deciding whether to invest. I’ve also asked staff to consider clarifying disclosure obligations under existing rules.”
  • Marketing Practices: “I’ve asked staff to make recommendations around how to guard against what effectively may be improper conditioning of the SPAC target IPO market. This could, for example, include providing more complete information at the time that a SPAC target IPO is announced.”
  • Gatekeeper Obligations: “I’ve asked staff for recommendations about how we can better align incentives between gatekeepers and investors, and how we can address the status of gatekeepers’ liability obligations.”
  • Cop on the Beat: “I’ve asked our Enforcement Division to continue to take all appropriate action, following the facts and the law, to protect investors in these vehicles.”

The SEC Chairman concluded his remarks by reminding the public that functionally SPACs and IPOs share many similarities and indicated that like investments should be subject to like regulations.

In addition to the SEC Chairman’s comments, ACA has observed increasing scrutiny of SPACs during the SEC’s examinations, although no specific “sweeps” dedicated to the sponsoring or investing in SPACs has been identified at present. One area for hedge fund managers to consider as we near the Form ADV annual amendment deadline is whether additional disclosures concerning any risks or conflicts associated with SPAC sponsorship or investments are needed within Part 2A of Form ADV. In addition, compliance policies and procedures should be reviewed to ascertain whether any updates are needed to address the investment allocation, information barrier, and any other relevant policies associated with SPACs and the hedge funds managed by the adviser.

Compliance Considerations for SPAC Sponsors

Whether SPACs are a passing fad or a lasting form of taking companies public, firms sponsoring SPACs need to consider several operational and compliance considerations. Download our white paper to explore the many concerns asset managers should keep in mind when sponsoring a SPAC.


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Please reach out to your ACA consultant or contact the Hedge Fund Practice Team if you have any questions about this article, or want to find out how ACA can help your firm meet their compliance obligations.

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