{"text":[[{"start":13.18,"text":"The Securities and Exchange Commission has promised closer scrutiny of revenue and profit projections put out by businesses going public via a special purpose acquisition company, in a shot across the bows of Spac advisers and promoters. "}],[{"start":27.93,"text":"John Coates, the acting director of corporate finance at the SEC, said on Thursday that the purported advantage of presenting investors with forward-looking statements by going public through a Spac “is overstated at best, and potentially seriously misleading at worst”. "}],[{"start":44.28,"text":"Spac critics say the companies engage in a form of regulatory arbitrage because young companies that do not have revenues, or sometimes even a prototype, can present lofty projections to the public about future growth. "}],[{"start":58.38,"text":"While businesses that choose a traditional initial public offering are not technically prohibited from doing the same, there are serious liability risks with doing so. "}],[{"start":68.82000000000001,"text":"Particular questions have been raised around electric vehicle technology companies going public via Spacs, which by the end of last year had amassed a market capitalisation of almost $60bn despite most having not yet made a single dollar in revenue. "}],[{"start":85.32000000000001,"text":"A Financial Times analysis of nine car tech groups that listed via a Spac in 2020 showed they expected revenues of just $139m between them that year but projected a combined $26bn in revenues by 2024. "}],[{"start":102.73,"text":"Sceptics have said inflated valuations for young businesses with unproven technology could be a sign that investors are being presented with an overly rosy picture of the company’s future growth when they make their public debut. "}],[{"start":116.71000000000001,"text":"When a Spac merges with an operating business that wants a public listing, it is said to “de-Spac”. "},{"start":123.052,"text":"In a statement, Coates said that such transactions should be subject to “the full panoply of federal securities law protections”. "}],[{"start":131.22,"text":"“A de-Spac transaction gives no one a free pass for material misstatements or omissions,” he said, adding that the SEC was considering treating such deals more like traditional IPOs. "}],[{"start":143.82,"text":"“If we do not treat the de-Spac transaction as the ‘real IPO’, our attention may be focused on the wrong place, and potentially problematic forward-looking information may be disseminated without appropriate safeguards. ”"}],[{"start":158.13,"text":"Spacs struck a combined $172bn in “de-Spac” deals in the first quarter of 2021, accounting for more than a quarter of the total value of all merger and acquisition transactions in the first three months of the year. "}],[{"start":173.84,"text":"The SEC has issued a number of statements warning investors about Spac hype. "},{"start":179.30700000000002,"text":"In March, it warned retail traders to be wary of Spacs sponsored by celebrities, a growing phenomenon. "}],[{"start":187.21,"text":"Coates has also called for greater transparency around how backers benefit from the deals. "},{"start":192.93900000000002,"text":"Several Spac sponsors, such as Chamath Palihapitiya and Michael Klein, are sitting on large fortunes as a result of shareholdings they received on favourable terms. "}],[{"start":203.38,"text":""}]],"url":"https://creatives.ftacademy.cn/album/001092088-1617938334.mp3"}