How New SEC Rules Could Impact SPAC Sponsors
In this episode of The SPAC Podcast, Nick Morgan, Partner at Paul Hastings LLP and co-founder of ICAN (Investor Choice Advocates Network), explains how the SEC’s 2024 SPAC rules may affect small sponsors and entrepreneurs navigating the regulatory landscape.
Nick emphasizes that while current SEC leadership may not pursue as many aggressive enforcement actions as in prior years, the rules themselves present challenges. In particular, changes to the PSLRA (Private Securities Litigation Reform Act) safe harbor for forward-looking statements raise serious legal questions.
Commissioner Hester Peirce even voiced concerns in her dissent, suggesting that the SEC may have overstepped its authority with this rule change an area ripe for potential challenge.
For SPAC sponsors and entrepreneurs, the takeaway is clear: the rules may create increased liability exposure for forward-looking disclosures, even if unintentional, making careful legal and compliance planning more important than ever.
Connect with the Guest:
Nick Morgan – Partner, Paul Hastings LLP | Co-Founder, ICAN
LinkedIn: https://www.linkedin.com/in/nicholasrmorgan/
View all of their episodes here:
https://www.thespacpodcast.com/guests/nick-morgan/
Connect with the Hosts & The SPAC Podcast:
Michael Blankenship LinkedIn:
https://www.linkedin.com/in/mikeblankenship/
Joshua Wilson LinkedIn:
https://www.linkedin.com/in/joshuabrucewilson/
YouTube Channel:
https://www.youtube.com/@Thespacpodcast
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Disclaimers:
The views, opinions, and statements expressed by the guest are solely their own and do not necessarily reflect the views of The SPAC Podcast, its hosts, or affiliated organizations. This content is for informational purposes only and should not be construed as investment, legal, tax, or accounting advice.
Michael J. Blankenship is a licensed attorney and is a partner at Winston & Strawn LLP. Joshua Wilson is a licensed Florida real estate broker and holds FINRA Series 79 and Series 63 licensure. The content of this podcast is intended for informational and educational purposes only and should not be interpreted as legal, financial, or compliance advice. The views and opinions expressed by the hosts and guests are their own and do not necessarily reflect the official policies or positions of any regulatory agency, law firm, employer, or organization.
Listeners are encouraged to consult their own legal counsel, compliance professionals, or financial advisors to ensure adherence to applicable laws and regulations, including those enforced by the SEC, FINRA, and other regulatory bodies. This podcast does not constitute a solicitation, offer, or recommendation of any financial products, securities transactions, or legal services.
Let’s Connect on LinkedIn:
👉 Michael J. Blankenship - https://www.linkedin.com/in/mikeblankenship/
👉 ...
Michael Blankenship:
ICAN is fighting against excessive punishments for regulatory infractions and working to restore due process in SEC proceedings. How might the new SEC rules, with increased disclosures and liabilities, affect small sponsors or entrepreneurs who may unintentionally violate them?
Nick Morgan:
I don’t think we’ll see as much enforcement under the current SEC regime as we did under Chair Gensler. But the 2024 SPAC rules do raise significant concerns.
Specifically, the rules change the PSLRA forward-looking disclosure liability protections. In my view, there’s a real question whether the SEC even has the authority to do that. Commissioner Hester Peirce raised this issue in her dissent, and I think there’s an opportunity for a legal challenge here.
So while we may not see aggressive enforcement, sponsors and entrepreneurs need to be aware: these new rules increase potential liability around forward-looking disclosures, even for unintentional violations.