ACA Paper Discusses Compliance Considerations for SPACs Sponsors

Special purpose acquisition companies, or SPACs, are increasingly gaining the attention of investors and regulators. A new white paper from ACA Compliance discusses how asset managers considering sponsoring SPACs may properly address compliance issues. “Firms considering SPAC sponsorship should understand how the SPAC will be situated and how the SPAC will affect existing advisory clients of the firm,” according to the paper. “Communicating with existing clients, limited partners, and investors is critical to ensuring interested parties are aware of the impact, particularly on investment opportunities.” For instance, the paper points out that sponsors and affiliated investment advisers might need to consider the allocation of expenses among participating advisory clients, the sponsor, and the SPAC and how firm resources are allocated between the SPAC and existing clients. The paper also advises firms to ensure that the proper infrastructure is in place for compliance monitoring, internal accounting controls and financial reporting capabilities, maintaining appropriate books and records, and navigating the process of operating a public company. Other important areas of compliance include oversight of marketing materials and the accuracy of risk language, conducting due diligence on target companies, regulatory concerns, and potential areas for conflicts of interests.