The Securities and Exchange Commission has promised closer scrutiny of revenue and profit projections put out by businesses going public via a special purpose acquisition company, in a shot across the bows of Spac advisers and promoters.
John Coates, the acting director of corporate finance at the SEC, said on Thursday that the purported advantage of presenting investors with forward-looking statements by going public through a Spac “is overstated at best, and potentially seriously misleading at worst”.
Spac critics say the companies engage in a form of regulatory arbitrage because young companies that do not have revenues, or sometimes even a prototype, can present lofty projections to the public about future growth.
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