Bankers Win the SPAC-Fee Grand Slam
It's been very lucrative for Wall Street to advise blank-check companies. Disclosing potential conflicts is good, avoiding them would be better.
Who’s watching out for investors?
Photographer: Angela Weiss/AFP via Getty Images
Gary Gensler, the U.S. Securities and Exchange Commission’s new chair, meant what he said. After months of warning investors not to dive into special purpose acquisition companies just because they’re backed by a celebrity and promising more scrutiny, the regulator on Tuesday took the rare step of sanctioning a SPAC and its merger target — a space-cargo firm — for misleading investors.
The SEC sued over allegations that the target, Momentus Inc., had lied about its technology and the fact it had been “successfully tested” in space, statements its SPAC sponsor, Stable Road Acquisition Corp., then repeated in public filings without the necessary due diligence. The companies and Stable’s chief executive officer settled without admitting or denying the agency’s claims, while Momentus’s former CEO is fighting the allegations.