SEC scrutinizing firms in SPAC mergers for overly sunny financial forecasts

SEC scrutinizing firms in SPAC mergers for overly sunny financial forecasts

April 16, 2021, Roll Call

Brian Rosenzweig spoke with Roll Call about the SEC’s recent focus around a discrepancy in going public between the IPO route and the newly popular deSPAC route. Businesses that go public through a merger with a SPAC commonly project their financial results into the future while those going public through traditional initial public offerings do not due to liability concerns under the federal securities laws.. Mr. Rosenzweig says, “That difference has set up a clash over investor protection concerns. It's a fair assumption that the SEC will continue to focus on forward-looking statements such as financial projections.”