Emory Law Journal


Carson S. Clear


The resurgence of Special Purpose Acquisition Companies (“SPACs”) in the U.S. securities market has demonstrated potential as an alternative to the traditional initial public offering (“IPO”). However, the evolution of SPACs from their fraudulent “blank check” ancestors has left the Securities and Exchange Commission (“SEC”) weary of SPACs’ continued presence in the market. Currently, SPACs exist as an exception to Rule 419 and the Penny Stock Reform Act of 1990, thereby allowing them to escape the rigorous disclosure requirements that not only eradicated their ancestors, but also significantly burdened the timeline of the traditional IPO process. While many consider SPACs a unique opportunity for non-institutional investors to reap benefits similar to those seen in private equity, a closer look into their evolution in the market suggests an entirely different conclusion.

This Comment offers a critical assessment of the SPAC structure and advances unique regulatory solutions. It begins with a focus on the landscape surrounding the SPAC structure, looking to the evolution of securities market regulations and the rise and evolution of the SPAC as an alternative to the traditional IPO. Following discussions on the various tensions present in the current form, this Comment sheds light on persistent issues lingering within the current form, illustrating the necessity for SPAC reform. Finally, this Comment proposes four solutions—bringing back investor voice, mitigating dilution to the investors, tidying disclosure requirements, and revisiting due diligence—and argues the need for SPAC creators to accept guidance from the SEC and look inward to SPAC performance to undergo self-reform in order to avoid the possibility of SPACs being regulated out of existence.