On March 30, 2022, the Securities and Exchange Commission (the “SEC”) proposed new rules and amendments to existing rules and forms (the “Proposed Rules”) addressing the treatment of special purpose acquisition companies (“SPACs”) in connection with their initial public offerings (“IPOs”) and subsequent de-SPAC transactions. Comments on the Proposed Rules are due 30 days after publication in the Federal Register or May 31, 2022 (60 days after issuance), whichever is later.

The Proposed Rules, if adopted, would represent a sea change in the treatment of SPACs by the SEC. A wide variety of market participants would do well to take heed of the Proposed Rules and to consider commenting on the Proposed Rules. If the Proposed Rules were to be adopted in the form in which they have been put forward, it is also worth noting that they reflect a number of fundamental changes to basic principles of securities liability that extend in their application beyond SPACs and de-SPACs.

This Legal Update (i) provides background on SPACs generally; (ii) summarizes the Proposed Rules; and (iii) provides key takeaways and practical considerations.