Holland & Knight LLP
MONTH-IN-BRIEF (Dec 2024)
Old SEC’s Parting Shot at SPACs
By Yelena Dunaevsky, Esq., SVP & Partner, Transactional Insurance, Woodruff Sawyer
In 2023 and 2024 the U.S. Securities & Exchange Commission (SEC) leveled several charges against Special Purpose Acquisition Company (SPAC) advisors. In what feels like a parting shot at the incoming administration, on December 12, 2024, the SEC lobbed another charge against Cantor Fitzgerald (Cantor), a leading SPAC investment bank and book runner, whose chairman and CEO, Howard Lutnick, is Donald Trump’s nominee for the U.S. Department of Commerce.
The point of contention is what the SEC believes to be Cantor’s failure to adequately disclose Cantor’s discussions with potential merger targets for two of its SPACs. The SEC charged Cantor with violations of Sections 17(a)(2) and 17(a)(3) of the Securities Act and Section 14(a) of the Exchange Act and Rule 14a-3 thereunder, alleging that Cantor’s two SPACs made materially false and misleading statements in their registration statements on Forms S-1 and S-4. The SEC order finds that at the time of each SPAC’s IPO, Cantor personnel, acting on behalf of the SPACs, had commenced negotiations with a small group of potential target companies for the SPACs, but that Cantor caused the SPACs in their SEC filings to deny having had contact or substantive discussions with potential business combination targets prior to their IPOs. Without admitting or denying the SEC’s findings, Cantor agreed to cease and desist from violations of the charged provisions and to pay the $6.75 million in civil penalties.
