Wedding Finance

Capital calls: Congress seems relaxed on PSPCs



A Wall Street sign is pictured outside the New York Stock Exchange in New York on October 28, 2013. REUTERS / Carlo Allegri / File Photo

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DO NO HARM. There are many ways the PSPC boom could end sadly, but government intervention probably isn’t. U.S. lawmakers held a hearing on Special Purpose Acquisition Companies Monday, which Financial Services Chamber Speaker Maxine Waters said raised 462% more funds in 2020 than the year before. The takeaway: politicians seem happy to let the experts fend for themselves.

Sometimes Congress goes too far when it comes to market fads. It has had multiple scramble hearings for meme stocks like GameStop (GME.N), with several lawmakers unrealistically suggesting that retail investors be protected from losses. During Monday’s relatively brief two-hour hearing, there was much less anxiety. One witness, law professor Usha Rodrigues, compared the SPAC to a shotgun wedding in Las Vegas, but many SPAC sponsors likely wouldn’t disagree.

Prescriptions were also few. Congressman Bill Foster raised the idea of ​​a “safe” PSPC list, but in general lawmakers have focused on how disclosures and liability stack up against initial public offerings – what the Securities and Exchange Commission is already reviewing. For once, Congress has identified a problem for which political tribulation is not the solution. (By Gina Chon)

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