According to Reuters, citing several industry accountants and lawyers familiar with the adjustments, the Securities and Exchange Commission (SEC) has stepped up its crackdown on special purpose buyout companies (SPAC) and has told the top auditors of such blank check buyout companies to more strictly account for the public shares of these shell companies.
SEC staff have privately told SPAC's top auditor that "redeemable" shares issued by these shell companies must be treated as temporary shares, breaking industry practice that they have long been regarded as permanent equity, these people said.
These people also said that this adjustment will cause most SPAC to fall short of NASDAQ.The minimum equity requirements of the capital markets (Capital Market) tier, thus pushing SPAC, which wants to be listed on Nasdaq, to the global market (Global Market) tier where there are no equity requirements.
This is the second time that SEC has tightened its accounting guidelines for SPAC this year, and it is also the latest means for SEC to overhaul the SPAC trading market. Over the past 18 months, there has been a boom in SPAC trading on Wall Street.
While the long-term impact of the change in the status of the proposed listing of SPAC remains unclear, some industry lawyers and auditors say it is worrying that SEC is trying to upend the long-term operations of the SPAC market.