(Reuters) -The legal dispute over specialty companies intensified on Friday when a group of US law firms cracked down on lawsuits last week demanding that blank check companies be regulated as investment companies.
SPAC is an acquisition vehicle that uses IPO capital to take a private company public and can make investments and sell shares without restrictions prior to such a merger.
Every company "that temporarily holds short-term treasuries and qualified money market funds while … looking for a company combination with one or more business firms is not an investment company under the 1940 law," a group of 49 law firms said in a joint statement on Friday.
Earlier this month, Bill Ackman's blank check company was sued by an investor who alleged Pershing Square Tontine Holdings Ltd. had improperly invested in securities and that it should be regulated under the Investment Company Act of 1
Reuters reported on Thursday that the Sam Advocates targeting Ackman could bring up to 50 new lawsuits against other SPACs.
Mr. Ackman last week called the lawsuit meaningless but admitted it was unlikely to be resolved soon and could also deter potential merger partners. His Pershing Square Tontine Holdings is the largest SPAC ever, after raising $ 4 billion last year.
The billionaire investor said he planned to give Tontine's shareholders warrants in a "better structured vehicle", which he called a specialty law firm.
The activity in the blank box has recently decreased from last year's boom due to increased scrutiny from the U.S. Securities and Exchange Commission and acidification of investor sentiment.