SPACs hit the road to Washington

2 minute read

The U.S. Capitol dome in Washington, April 21, 2020. REUTERS/Tom Brenner

Register now for FREE unlimited access to

WASHINGTON, July 16 (Reuters Breakingviews) - Special purpose acquisition companies have gone so mainstream that they now have a trade group in Washington. The SPAC Association will include investors, sponsors, investment banks, auditors and others, Politico reported on Thursday. But with too many competing interests inside the tent, the new group’s influence on the Hill could be dulled.

It's not as if blank-check companies don’t need some D.C. help. The Securities and Exchange Commission has said it will be tougher on conflicts of interests, inflated projections and inadequate disclosures used by these firms, which buy privately held growth companies and give them a rapid stock-market listing. On Tuesday, the agency charged space-transport firm Momentus, its SPAC partner, sponsors for misleading claims about their planned merger.

Lobby groups work best when they are sharply focused and unified. Yet the SPAC Association doesn’t represent a single team. One big conflict in SPACs is between sponsors, who often get big payouts whether the target they acquire is good or middling, and their public investors. Target companies’ backers have yet another set of incentives. With so many different interests, the SPAC lobby is already at risk of being off-message. (By Gina Chon)

Register now for FREE unlimited access to

On Twitter

Capital Calls - More concise insights on global finance:

Ericsson hits Chinese wall read more

Santander M&A drive takes weird U.S. bypass read more

Beijing underwhelms with Shanghai tax experiment read more

Rio Tinto faces even heavier weather read more

Lingering pandemic is double hit to online retail read more

Register now for FREE unlimited access to
Editing by Jennifer Saba and Amanda Gomez

Our Standards: The Thomson Reuters Trust Principles.

Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.