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CFA Institute Announces the Launch of SPAC Working Group

New York City, United States 05 May 2021

CFA Institute, the global association of investment professionals, today announced the creation a new working group to examine and make recommendations regarding the surge in U.S public listings of special purpose acquisition companies (SPACs) and the implications for investor protection, corporate governance, and market integrity. 

“We believe the working group will provide a valuable perspective to U.S. and other global regulators, who have already signaled increased scrutiny of the SPAC structure and related disclosures” said Margaret Franklin, CFA, President and CEO, CFA Institute. “We want to make sure the issues of investor protection and market fairness are fully examined as the SPAC structure continues to proliferate around the world. We plan to convene a broad group of experts to consider SPAC best practices and potential areas for regulatory action.”

Among the potential concerns for SPAC investors and market integrity include: the experience of the SPAC sponsor, particularly as more celebrity-driven SPACs enter the sector; the potential for “no deal” SPACs returning less money than invested by retail investors who purchased after the IPO; the disclosure rigor, especially as compared to that of a traditional IPO; the potential for SPACs to overpay for a target given the competition for deals vs. other SPACs and private equity funds; the post-deal dilution after more private capital enters the transaction; among other concerns.

The SPAC Working Group will include a range of market participants, SPAC practitioners, exchange representatives, academics, and legal experts, and will target quarterly discussions over the next year to examine the latest resurgence of the SPAC model. Of particular focus will be SPAC structural features and disclosures, relevant listing standards, marketing practices, inherent conflicts of interests, and potentially misleading performance claims. The working group will also consider the popularity of SPACs globally, as other jurisdictions move to introduce the SPAC structure into their own public markets.

The working group will publish a report in early 2022 and present its findings, along with any policy recommendations, to U.S. and global regulators and policymakers.

About CFA Institute

CFA Institute is the global association of investment professionals that sets the standard for professional excellence and credentials. The organization is a champion of ethical behavior in investment markets and a respected source of knowledge in the global financial community. Our aim is to create an environment where investors’ interests come first, markets function at their best, and economies grow. There are more than 170,000 CFA charterholders worldwide in 164 markets. CFA Institute has nine offices worldwide and there are 161 local member societies. For more information, visit www.cfainstitute.org or follow us on Twitter at @CFAInstitute and on Facebook.com/CFAInstitute.

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