Securities and Exchange Commission Chairman Gary Gensler, speaking at Healthy Markets Association, expressed concern that retail investors in SPACs may be at a disadvantage to those backing a traditional initial public offering.

He sees a major discrepancy between the amount of information that a company must provide through a traditional IPO versus those required from SPACs.

Specific concerns included:

• inconsistent disclosures in SPAC transactions
• making investors more aware of SPAC fees, expected equity dilution, and conflicts of interests
• SPAC sponsors’ presentations, hyped press releases and celebrity endorsements prior to filing full disclosures
• whether directors, officers, sponsors, accountants are acting as gatekeepers and not misleading investors with rosy projections
• institutional investors that provide PIPE loans may be receiving inside information and the opportunity to buy shares at a discounted price

The SEC, which plans to propose new SPAC regulations as soon as April 2022, has been increasingly scrutinizing SPAC deals.

SPACs now account for more than 60% of US IPOs. More than 580 SPACs launched this year, raising more than $155 billion. This outpaces the sum of six prior years in which there were 420 SPACs, raising $125 billion.