The meteoric rise in the use of special purpose acquisition companies (SPACs)—with more than $98 billion raised in over 300 deals year-to-date alone—has prompted increased government scrutiny of, and civil litigation involving, SPACs and their sponsors, directors, officers, and affiliates. SPAC-related civil litigation is heating up in U.S. state and federal courts, and the Securities and Exchange Commission’s (SEC) commencement of an informal investigation into investment banks’ SPAC activities portends a more aggressive enforcement posture under incoming SEC leadership. This Legal Update examines the evolving regulatory landscape for SPACs and the potential for SEC enforcement in the SPAC market, details emerging trends and risks posed by SPAC-related litigation in state and federal courts, and offers practical guidance for SPAC market participants to mitigate the regulatory and litigation risk posed by such transactions.

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