The regulation of special purpose acquisition vehicles (“SPACs”) has received significant attention recently from both regulators and legislators. Although there are a number of policy issues involving SPACs, including disclosure requirements and securities law liability standards for the SPAC and its sponsors, much of the recent policy attention has been focused on the role of retail investors in SPAC trading activity. For example, the Chair of the House Financial Services Committee recently expressed concern that “SPAC mergers are structured to ensure Wall Street insiders receive huge profits and retail investors pay the cost.” The Chair of the SEC, Gary Gensler, has noted similar issues, commenting that “[i]t may be that the retail public is bearing much of these costs,” referring both to dilution costs and to fees associated with the various stages of capital raising in a SPAC’s lifecycle.

In this Nothing But The Facts Statement, the Committee on Capital Markets Regulation seeks to determine the role played by retail investors in the SPAC investment landscape. We find that although investments in SPACs are available to retail investors, such investments are minimal.

The full report is available here.