Boyden Gray & Associates submitted comments on behalf of Job Creators Network on the SEC proposed rule on “Special Purpose Acquisition Companies (SPACs), Shell Companies, and Projections” 87 Fed. Reg. 29,458, arguing that the proposed rule would destroy the domestic market for SPACs, which provide small businesses with meaningful access to capital that otherwise is reserved only for big corporations and IPOs. The comment explains that,
the recent increase in SPACs has helped level the playing field by revealing those shortcomings with the traditional IPO process. Using SPACs, smaller companies can much more easily obtain access to capital and grow into bigger businesses that provide jobs, increase competition, and improve overall economic efficiencies. SPACs democratize IPOs: going public is not reserved for just the billion-dollar corporations.But some have argued that the new proposed rule is designed to eliminate SPAC market. Lawyers from Davis Polk expect that the proposed rule will significantly reduce SPAC activity. “[T]he SEC is effectively seeking to act as a merit regulator and prohibit certain activity.” Boyden Gray & Associates explains that such action by the SEC would be illegal.
The SEC has no statutory power to pick winning and losing investments, and it certainly cannot do so through the backdoor of “disclosure” and “regulatory” requirements. . . . By essentially shutting down an entire market through the guise of regulation, the SPAC Proposal violates the statutory requirement that SEC regulations “promote efficiency, competition, and capital formation.” 15 U.S.C. §§ 77b(b), 78c(f), 78w(a)(2).The full comment is available here. Job Creators Network is a nonpartisan membership organization whose mission is to educate employees of Main Street America and protect the 85 million people who depend on the success of small businesses.