In a keynote address to investor advocates, SEC Chairman Gary Gensler stated that the new rules are intended to strengthen the obligations of "gatekeepers" who facilitate fundraising at earlier stages of a blank-check company before it seeks an initial public offering (IPO).
SPACs, Wall Street's most recent gold rush, are publicly traded shell companies that raise funds to acquire a private company and take it public, allowing targets to avoid the more onerous regulatory scrutiny of an IPO. The SEC is attempting to improve oversight of the SPAC deal market and to strengthen investor protections for SPACs.
"The investing public may not be getting the same protections between traditional IPOs and SPACs," Gensler said at a meeting of the Washington-based Healthy Markets Association, highlighting a concern about how SPACs may be priming the market as they prepare for an IPO.
"Many gatekeepers perform the same functional role as they would in a traditional IPO, but they may not be performing the due diligence that we've come to expect," Gensler added.
The SEC expanded its crackdown on the SPAC sector in September, telling top auditors of these companies to account for public shares in these shells more strictly. According to Reuters, the SEC is looking into changes to projections as well as addressing gatekeeper liability.