Part of the appeal of SPACs in comparison to IPOs, is that SPACs are less regulated and can act more entrepreneurially. Those who invest in SPACs tend to be very wealthy. Shouldn’t they be allowed to use their own judgement about whether the benefits of SPACs are worth the costs?
Recall that the SEC also tried to slow down the initial development of venture capital by Georges Doriot.
(p. B1) WASHINGTON—A top securities regulator warned about the surge in fundraising by blank-check companies known as special-purpose acquisition companies.
Speaking at a legal conference Wednesday [April 7, 2021], Securities and Exchange Commission official John Coates said there are “some significant and yet undiscovered issues” with SPACs, which allow private companies to go public with a structure that offers outsize potential rewards to backers while bypassing some safeguards of a traditional initial public offering.
For the full story, see:
(Note: bracketed date added.)
(Note: the online version of the story was updated April 7, 2021, and has the title “SEC Official Warns on Growth of Blank-Check Firms.”)