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November 18, 2021

Better Markets Releases Fact Sheet That Cuts Through the Hype on SPACs

WASHINGTON, D.C.—Stephen Hall, Better Markets Legal Director and Securities Specialist, released the following statement on the release of Better Markets’ Fact Sheet on special purpose acquisition companies:

“Special purpose acquisition companies, or SPACs, have become increasingly trendy of late, commanding an increasing amount of attention. They are basically public blank check companies formed to identify and then merge with a private company to take it public while side-stepping the usual initial public offering process. However, despite the hype, they’re subject to weak regulation and fraught with risks for investors. Our fact sheet lays out some of the key points that any investor, as well as the SEC, should be thinking about when it comes to SPACs.

“SPACs have attracted attention as some high-profile celebrities, including Shaquille O’Neal, have assumed public roles in SPACs. And SPACs have recently been used to take several well-known companies public, including DraftKings. Former President Trump is even using a SPAC to launch his social media company.

“However, as our Fact Sheet explains, the reality of SPACs is much less glamorous. SPACs are uniquely risky investments. There is no actual business to evaluate, as investors are relying entirely  on management’s ability to identify a promising target and complete a merger.  In addition, there is an intense conflict of interest between sponsors and investors: The sponsors of a SPAC forfeit their stake if no merger is completed, creating an incentive to push for a merger, any merger, no matter how poor the prospects for success. Little wonder then, that according to empirical research, the return on SPACs seriously trails the market, especially for retail investors and especially for those who hold their SPAC shares through the merger phase. It’s also no surprise that bills have appeared in Congress that would strengthen oversight of SPACs.

“In short, while SPACs can make some people a lot of money, far too often that money is coming straight out of the pockets of retail investors. Cutting through the hype to learn the actual facts on SPACs and their dismal track record is a critical step for investors and for policymakers seeking to address the unique risks these trendy investments pose.”


Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies – including many in finance – to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit

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