Brattle Associates Dr. Adrienna Huffman and Adam Karageorge and Research Analyst Monet Lee have coauthored a Law360 article on the special purpose acquisition company (SPAC) landscape in 2022. Within, they explore the increased potential for securities litigation amid growing regulatory scrutiny and poor return performance for many companies that have gone public via SPACs.
SPACs – shell companies created by sponsors who raise funds by selling shares through initial public offerings (IPOs) – skyrocketed in 2021, but the market has cooled in early 2022. SPAC IPOs and initial business combinations (IBCs) have been on a downward trend as of late, while shareholder redemption rates and liquidations are increasing. The authors, citing unfavorable market conditions and increased scrutiny from the US Securities and Exchange Commission (SEC), predict that SPAC-related litigation will rise in the coming years, and share the types of litigation that can be expected from both private and public litigants.
The full article, “Latest SPAC Trends Point To Risk Of Negative Outcomes,” is available below.