The SPAC Bubble Has Burst. We Have Yet To See The Worst.
We have warned for months (most recently in late March), that the SPAC issuances of the past year-plus were a bubble waiting to burst. The SEC issued accounting guidance on April 12th which essentially classifies warrants issued as part of a SPAC as liabilities rather than as equity instruments. This may lead to a tidal wave of financial restatements. However, what if during this process of scrutiny any wrongdoing is discovered? (we expect there to be significant fraud underlying this SPAC bubble). At that juncture the SEC’s Division of Enforcement would get involved. A perp walk or two would most certainly drive a stake through the heart of SPACs.
