Will SPAC Restatement Wave Trigger Shareholder Litigation?

By Elaine Harwood, Steven McBride and Laura Simmons (June 22, 2021, 5:48 PM EDT) -- On April 12, the U.S. Securities and Exchange Commission's acting director of the Division of Corporation Finance, John Coates, and acting chief accountant, Paul Munter, issued a joint statement highlighting concerns about the accounting treatment of warrants issued in conjunction with special purpose acquisition companies, or SPACs.[1]

Initial funding for a SPAC often includes warrants that have typically been classified as equity in the SPAC's financial statements. However, in their statement, Coates and Munter described certain common features of those warrants that would require them to be classified as liabilities rather than equity.

They explained that if, after considering the statement,...

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