SEC's Latest Guidance Likely To Further Slow SPAC Market

By Tom Zanki (April 13, 2021, 8:52 PM EDT) -- The U.S. Securities and Exchange Commission's latest guidance advising that special purpose acquisition companies may need to refile financial statements to properly account for warrants will likely further slow activity in a robust market that was already cooling, experts said Tuesday.

SEC officials said Monday they determined that warrants — which are instruments that allow investors to buy additional shares at a fixed price — may need to be classified as liabilities rather than equity for many SPAC transactions. Warrants until now have generally been considered equity in these deals.

SPACs, also known as blank-check companies, are shell entities that sell...

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