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Congress will hold hearings on SPACs and increase its scrutiny



(Reuters) – US lawmakers are reviewing the review of specialty companies, or SPAC, with a hearing on Monday as they consider legislation aimed at limiting industrial liability.

The US Securities and Exchange Commission has increased its focus on the SPAC in recent months through a series of public statements, new guidance and a Wall Street banking inquiry led by the firm's executive team. Republican Sen. John Kennedy of Louisiana last month introduced a bill aimed at increasing transparency for investors in SPAC.

SPAC is a shell company that collects money through a listing to acquire a private company in order to make it public and circumvent a traditional first listing process. Critics say banks and SPAC sponsors have reaped huge dividends at a cost to investors at a later stage. House is considering legislation that would redefine "blank check companies" from an important 1

995 law to include special purpose companies, according to the announcement.

The law created a safe haven that protects listed companies from shareholder disputes with forward-looking statements. are made in good faith, identified as such and arranged in warning language.

Safe Harbor does not protect IPOs or certain blank check companies, but sponsors have generally relied on SPAC offers and have relied heavily on issuing growth forecasts. The SEC has considered guidelines that would slow down these forecasts, Reuters reported earlier this month.

The prospects for the bill to become law are unclear, but it signals growing congressional attention to the industry. Catalog

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