March Madness extends into April as the Commission markedly increases its focus on SPACs.
TAKEAWAYS
Surprise pronouncements call into question use of the PSLRA safe harbor for projections and accounting treatment for warrants.
Flurry of activity and nature of the SEC’s guidance may signal a desire to cool down the hot market for SPACs.
The Securities and Exchange Commission (SEC or Commission) is raising its voice on Special Purpose Acquisition Companies (SPACs), alerting sponsors, targets, and investors to regulatory risks and raising new concerns about SPAC-related disclosures.
The SEC’s 2020 statements and guidance were relatively relaxed the Commission focused largely on disclosure issues, including a statement from then-Chairman Jay Clayton to ensure that retail investors understand the incentives of SPAC sponsors, along with remarks by SEC officials during the 2020 SEC Speaks conference concerning risks created by potentially divergent incentives between sponsors and i
Gary Gensler Sworn In As Member Of The SEC Date
17/04/2021
Gary Gensler was sworn into office today as a Member of the Securities and Exchange Commission by U.S. Senator Ben Cardin. He was nominated to Chair the SEC by President Joseph R. Biden on February 3, 2021 and confirmed by the U.S. Senate on April 14, 2021.
“I feel incredibly privileged to join the SEC’s team of remarkable public servants,” Gensler said. “As Chair, every day I will be animated by our mission: protecting investors, facilitating capital formation, and promoting fair, orderly, and efficient markets. It is that mission that has helped make American capital markets the most robust in the world.”
[co-author: Madison Gaudreau]
On April 14, 2021, the U.S. Senate confirmed the nomination of Gary Gensler as the 33rd Chair of the U.S. Securities and Exchange Commission (“SEC” or “Commission”).[1] This change will bring forth a Democratic majority at the SEC which, in turn, suggests that the Commission will change its current emphasis on capital formation to focus more on investor protection and the following other areas: rules required by the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) such as security-based swaps, compensation, and stress tests for certain SEC registrants like asset managers; and inspections, examinations, and enforcement. Below we examine what to expect from Mr. Gensler’s SEC, including an expected new enforcement landscape and heightened interest in digital currency, Special Purpose Acquisition Companies (“SPACs”), and new disclosure mandates for issuers on climate and ESG issues.
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In the US Securities and Exchange Commission staff’s most recent guidance addressing environmental, social, and governance (ESG) investing, the staff of the Division of Examinations released an April 9 Risk Alert noting observations made during recent examinations of investment advisers and funds (both registered and private) engaged in ESG investing.
The Risk Alert[1] highlights certain deficiencies and internal control weaknesses observed by the staff, as well as observations regarding what the staff viewed as effective practices related to the management and oversight of ESG investing activities. The Risk Alert also summarizes certain ESG-related areas on which the Division of Examinations (Examinations) intends to continue to focus in its examinations of investment advisers and funds. In an April 12, 2021, statement, US Securities and Exchange Commission (SEC) Commissioner Hester M. Peirce offered her thoughts on th