SPAC Boom Faces New SEC Threat With Accounting Crackdown
- Warrants issued by blank-check companies may be liabilities
- Guidance threatens to disrupt new filings in hot market
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U.S. regulators are throwing another wrench into Wall Street’s SPAC machine by cracking down on how accounting rules apply to a key element of blank-check companies.
The Securities and Exchange Commission is setting forth new guidance that warrants, which are issued to early investors in the deals, might not be considered equity instruments and may instead be liabilities for accounting purposes. The move, reported earlier by Bloomberg News, threatens to disrupt filings for new special purpose acquisition companies until the issue is resolved.