Advantages of SPACs Over Traditional IPOs
Recent SEC Pronouncements (Continued)
• On April 8, the SEC's Acting Director of the Division of Corporation Finance also
issued a statement casting doubt on the availability of the safe harbor under the
Private Securities Litigation Reform Act for forward-looking statements in SPAC
merger proxy statements. Such safe harbor is unavailable for statements in
initial public offerings, as it was intended to encourage existing public companies
to provide forward-looking information to the market. The Acting Director
contends that, since the de-SPAC is the functional equivalent of an IPO through
a different process, the safe harbor should be unavailable for the merger proxy
statement. However, the market has come to expect that the Target will provide
projected financial information to the SPAC and the PIPE investors, and we
expect such practice to continue. We note that the bespeaks caution doctrine
would continue to be available in the absence of the safe harbor.
Morgan Lewis
13View entire presentation