Senator Elizabeth Warren, along with three other Senate Democrats, wants to bring serious scrutiny to the SPAC process, as letters they sent to the most prominent dealmakers in the space attest, Reuters reports.
Warren was joined by Tina Smith, Sherrod Brown and Chris Van Hollen.
“We seek information about your use of SPACs in order to understand what sort of Congressional or regulatory action may be necessary to better protect investors,” the senators wrote, per Reuters.
The aforementioned letter said there has been “significant market dysfunction” because of SPACs, with the creation and operation of them maneuvered to “win even when investors lose.”
The reports say insides have taken advantage of gaps in legislative or regulatory rules at the expense of regular investors.
From there, the letter goes on to implore the officials to answer several questions related to SPACs, including every SPAC they’ve been involved in, their relationship to it, what kinds of communications they’ve had related to it, and the financial compensation and business arrangements involved in said SPAC.
SPACs, as the letters note, have become increasingly popular recently, particularly since the pandemic hit. Sponsors have said SPACs represent the chance for a quicker, more efficient way to go public, eschewing the normal process of an IPO.
The letters were sent to Cantor Fitzgerald’s Chief Executive Officer Howard Lutnick, former Citigroup banker Michael Klein, casino mogul and Houston Rockets owner Tilman Fertitta and veteran investor Chamath Palihapitiya.
Additionally, they were sent to David Hamamoto, who led the SPAC that merged with EV maker Lordstown Motors Corp, and former General Motors Vice Chairman Stephen Girsky.
SPACs have kept up in popularity – a week ago, PYMNTS reported on the one for FinTech Pagaya Technologies, which could go for as much as $9 billion.
Pagaya saw second-quarter sales totaling almost $95 million. The company, which previously worked in AI for financial service providers, is looking into expanding into mortgage and insurance products.