Investment Adviser Fined $1.4 Million For Failure To Disclose SPAC Conflicts
On May 31, 2023, the United States Securities and Exchange Commission (SEC) fined a New York investment adviser (Investment Adviser) $1.4 million for allegedly failing to disclose conflicts of interest regarding special purpose acquisition companies (SPACs). In the Matter of RTW Invs., L.P., SEC Administrative Proceeding 3-21473 (May 30, 2023). According to the SEC, Investment Adviser personnel sponsored two separate SPACs while those same personnel simultaneously invested client funds in the SPACs, which the SEC alleged was a conflict of interest that required disclosure. The Investment Adviser neither admitted nor denied the allegations in the SEC’s Order.
SEC Brings Enforcement Action Against Investment Advisor For Allegedly Failing To Disclose Conflicts Of Interest In SPACs Into Which It Invested Client Funds
On September 6, 2022, the Securities and Exchange Commission announced that New York-based, registered investment advisor Perceptive Advisors LLC (“Investment Advisor”) had agreed to pay a $1.5 million civil penalty for allegedly failing to disclose conflicts of interest regarding ownership of its personnel in sponsors of special purpose acquisition companies (SPACs). According to the SEC, the Investment Advisor used private client funds to facilitate transactions benefitting SPACs in which the Investment Advisor’s personnel and other clients had financial interests but failed to disclose the alleged conflicts resulting from those interests.
SEC Proposes New SPAC Disclosure Rules
On March 30, 2022, the Securities Exchange Commission (“SEC”) published its long-awaited proposed rules and rule amendments applicable to special purpose acquisition companies (“SPACs”) for comment by May 31. The stated purpose of the proposed rules, which would impose significant changes to the rules affecting SPACs, is to “more closely align the required financial statements of private operating companies in transactions involving shell companies with those required in registration statements for an initial public offering.”