Regulators Warn That SPAC Accounting Errors Require Fixes

By Tom Zanki (April 12, 2021, 10:00 PM EDT) -- The U.S. Securities and Exchange Commission on Monday cautioned that special purpose acquisition companies may need to refile regulatory documents to correct accounting errors involving the classification of warrants, potentially generating uncertainty for the red-hot SPAC market.

SEC officials said the agency conducted a recent study of "fact patterns" involving warrants issued in connection with SPACs, also known as blank-check companies, revealing that such instruments may be considered liabilities rather than equity under certain circumstances. SPAC warrants until now have generally been understood as forms of equity.

The securities watchdog, which has been reviewing hundreds of blank-check initial public offerings in...

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