FILE PHOTO: The seal of the U.S. Securities and Exchange Commission (SEC) is seen at their headquarters in Washington, D.C., U.S., May 12, 2021. REUTERS/Andrew Kelly/File Photo
March 29, 2022
(Reuters) – The U.S. Securities and Exchange Commission (SEC) will propose limiting the legal protections that blank-check companies rely on to make bullish projections, Bloomberg News reported on Tuesday.
The regulation will be part of a broader set of rules governing special purpose acquisition companies (SPACs), set to be released on Wednesday, the report said, citing people familiar with the matter.
Under the new rule, investors can sue over inaccurate SPAC forecasts, according to the report.
Last year, Reuters reported that the securities regulator was weighing guidance to rein in growth projections made by SPACs, amid concerns that such forecasts were often wildly optimistic.
Market interest for SPACs has waned in recent months, hurt by high rates of redemptions by investors and U.S. market volatility triggered by rate hike concerns and geopolitical tensions.
(Reporting by Niket Nishant in Bengaluru; Editing by Devika Syamnath)