Market Overview

SPAC Stocks Fall After SEC Chairman Pushes For Additional Disclosures

SPAC Stocks Fall After SEC Chairman Pushes For Additional Disclosures

Special purpose acquisition companies, or SPACs, have been one of the hottest ways for companies to go public and raise money in 2020. This year has seen $42 billion raised from SPACs, more than the last five years combined. 

What Happened: SEC Chairman Jay Clayton was interviewed on CNBC’s "Squawk Box" Thursday morning to discuss SPACs. He would like to see more disclosures come from this popular IPO alternative.

Clayton praised the competition SPACs bring versus traditional IPOs.

“In some ways, it's very healthy, it creates a competition around the way we distribute shares widely to the public market,” Clayton said. “For good competition and good decision making you need good information.”

Why It's Important: Clayton said he would like to focus on the two areas of equity ownership and incentives for the sponsors bringing the SPAC to market.

“Incentives and compensation to the SPAC sponsors” is the area he is most focused on, also adding, “how much of the equity they have now, what are their incentives?”

Clayton said the SEC can’t dictate the pricing of SPACs or the fee amounts to sponsors, but they can dictate that disclosures are present and fair to investors.

“We expect the disclosure to be such that an investor can understand all those motivations,” Clayton said.

Price Action: Clayton's comments come as SPAC stocks have been trading lower Wednesday and Thursday, although they started to pare losses at time of publication:

Switchbank Energy Acquisition Corporation (NYSE: SBE) shares are trading flat at $12.21 after hitting $13.15 early Thursday from confirming its rumored merger with ChargePoint.

  • Tortoise Acquisition Corp (NYSE: SHLL), which is set to finalize its merger with Hyliion next week, shares were down 9% to $40.97.
  • Social Capital Hedosophia II (NYSE: IPOB), which is set to merge with Opendoor, has shares down 2% to $14.98.
  • Gores Holdings IV (NASDAQ: GHIV), which announced the largest SPAC deal ever, is trading flat at $10.35.
  • Kensington Capital Acquisition (NYSE: KCAC), which is merging with QuantumScape, is down 4% to $16.02.
  • Lancadia Holdings II (NASDAQ: LCA), which will become Golden Nugget, is down 7% to $13.96.
  • Spartan Energy Acquisition (NYSE: SPAQ), which is merging with EV company Fisker, is down 7% to $13.09.
  • Pershing Square Tontine Holdings (NYSE: PSTH), the largest SPAC by money raised, is trading 3% lower at $22.05.

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