In a recent aggressive and ground-breaking decision, the Securities and Exchange Commission announced enforcement actions against a special purpose acquisition company (SPAC) known as Stable Road Acquisition Corp. (SRAC); its sponsor, SRC-NI; the CEO of SRAC; the target company; and the target company’s former CEO.
This represents the very first time that the SEC has sanctioned a SPAC, its sponsor, and the target company before a shareholder vote on the merger. All parties reached a settlement with the SEC with the exception of the target’s former CEO, who continues to litigate the matter.
With this decision, the SEC has made clear that SPAC sponsors must conduct adequate due diligence in connection with a merger, and that SPAC transactions will draw increased regulatory scrutiny by the SEC under the Biden administration.
‘Enforcement 40’ for 2020
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