Elizabeth Warren releases first congressional SPACs investigation report
US Senator Elizabeth Warren (D-Mass.), on Tuesday, released a detailed report on SPACs, or special purpose acquisition companies. The 26-page report is based on what was discovered during the senator’s investigation of prominent SPAC founders.
An SPAC is a publicly traded company formed only to acquire or merge with an already established organization.
The US Securities and Exchange Commission (SEC), last year in May, issued an updated investor bulletin representing views of the staff of the Office of Investor Education and Advocacy at the SEC and explaining SPACs. The detailed document notes that the information it provides “is not a rule, regulation, or statement” of the commission and “has no legal force or effect: it does not alter or amend applicable law, and it creates no new or additional obligations for any person.”
Senator Warren’s report follows the first congressional investigation of SPACs, conducted by the congresswoman herself.
In November last year, Senator Warren urged the SEC to conduct an investigation following reports of potential securities fraud, of Digital World Acquisition Corp., which is the SPAC that proposed merging with former President Donald Trump’s social media company, Truth Social. In December, the Washington Post reported the SPAC was under investigation by Finra as well as the SEC. Law360.com reported last month that the SEC probe lingers as Digital World looks at a deal.
Senator Warren’s office says that following her investigation, the senator intends to present an SPACs accountability bill that would codify SEC’s expanded definitions of SPAC underwriters into law.
“This investigation found that Wall Street insiders have used SPACs as their own personal piggy banks while retail investors have suffered,” said Senator Elizabeth Warren in a press release issued by her office. “This industry is rife with fraud, self-dealing, and inflated fees, and the SEC and Congress should continue to act to crack down on these abuses.”
The detailed report by Senator Warren can be downloaded from the website of her office (here).
