How SPACs Disable Indirect Investor Protection

Special Purpose Acquisition Companies (SPACs) are a trap for unwary investors. In standard public equity securities, even the most naïve investor is protected, first, by the market price – you pay only for what you get – and, second, by the comfort that nothing else is required of an individual investor to realize the full value of the security. SPACs disable both protections. Because of SPACs’ redemption option, SPAC shareholders need to do something – decide whether to redeem – and cannot rely on the market price to ensure they are getting value for their money. Predictably, sophisticated repeat players … Read more