CFA Institute Tells SEC to Tighten Disclosure Regs for SPAC Sponsors

The CFA Institute, the organization for investment professionals, is telling regulators to tighten disclosure requirements for SPAC sponsors, the Financial Times reported Sunday (May 8).

This will help the blank check companies be more transparent.

The CFA Institute recommends SPAC sponsors should fully disclose any affiliations with investors and other target companies, along with any side deals with anchor or pipe investors.

Better disclosures is one of the seven recommendations from the organization. The CFA Institute is mostly known for looking over the tests to become a chartered financial analyst. It comes after the Securities and Exchange Commission (SEC) reported on the SPACs in March.

The CFA had recommended that there be more detailed information from SPAC executives. According to Amy Borrus, executive director of the Council of Institutional Investors, and a member of the CFA SPAC Working Group, the tougher disclosures are important because many SPACs have an opacity to them, with the possibility for conflicts of interest.

In addition, the CFA has urged that the SEC look into whether there needs to be more rules to tackle SPAC insider trading. The report said there needed to be more scrutiny of the rumors and “priming the pump” communications from social media.

See also: Navigation Capital Cancels Four SPAC Deals as Industry Cools

PYMNTS wrote that Navigation Capital Partners, an investment firm, had shut down plans for four new SPACs earlier this year.

That came as there had been a trend on investors not being as interested in blank check companies.

Navigation as of April 22 didn’t go forward with plans for Navigation Capital Acquisition VI, VII, VIII and IX, with the goal having been to raise $150 million on all those deals.

Investors on one of them had included Lawrence Mock and David Panton, and Lonnie Johnson, who invented the Super Soaker water gun, was CEO of one of them.

According to a report, that brought the total of abandoned SPAC filings to seven, the second largest wave of canceled blank check mergers since mid-March.