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Illustration: Sarah Grillo/Axios

The SPAC party may not be over, but the cops are asking everyone to keep the noise down.

Driving the news: The SEC is mulling new guidance on when safe harbor applies to forward-looking statements by companies going public via SPAC, according to Reuters.

  • This comes on top of recent SEC clarification to how SPACs account for warrants, which crushed new SPAC formations under a paperwork logjam.

Safe harbor: The SPAC surge has been driven, in part, by an understanding that target companies can provide more forward-looking projections than would be allowed via a traditional IPO. That's why we've seen so many pre-commercial tech companies take this path, including futuristic vehicle makers (e.g., flying taxis, AVs, spaceships).

  • Regulators may seek to drain that safe harbor for SPACs.
  • There are some who argue that the SEC should move in the opposite direction, by extending the protections to IPO issuers, but that doesn't sound like it's on the table.

Accounting: It's been about three weeks since the SEC issued guidance on SPAC warrants accounting, and new formations have fallen off a cliff. Some mornings there would be a dozen new SPACs in this newsletter, whereas the current over/under is one.

  • Almost any SPAC with warrants (i.e., most of them) has to rework their numbers — a process that involves bankers, accountants, lawyers and printers. In short, the service providers are swamped.
  • Not only is this resulting in stalled formations, but also delays in new merger announcements and completions of already-announced mergers. WSJ reporter Amrith Ramkumar wrote yesterday: "The dwindling total of new mergers concerns some analysts because the market is falling behind the pace needed for all of the existing SPACs to find targets in the next two years — the typical deadline for blank-check firms to do deals."

The bottom line: SPACs have been around for decades, but gained new popularity because they were easy money for both sponsors and targets. Now, the blank check may be coming due.

Go deeper

Updated 19 mins ago - Politics & Policy

Trump sues New York Times and his niece over tax report

Former President Trump hosting a boxing match in Hollywood, Florida on Sept. 11. Photo: Chandan Khanna/AFP via Getty Images

Former President Trump filed a $100 million lawsuit against the New York Times and his niece Mary Trump on Tuesday over the news outlet's reporting on his tax records, the Daily Beast first reported.

Details: The lawsuit, filed in New York's Dutchess County, alleges NYT journalists "engaged in an insidious plot to obtain confidential and highly-sensitive records" and that it "convinced" Mary Trump to "smuggle records out of her attorney's office and turn them over to The Times."

House passes government funding, debt ceiling bill

Speaker Nancy Pelosi. Photo by Kevin Dietsch/Getty Images

The House passed a bill on Tuesday to fund the government through early December, along with a measure to raise the debt ceiling through December 2022.

Why it matters: The stopgap measure, which needs to be passed to avoid a government shutdown when funding expires on Sept. 30, faces a difficult journey in the Senate where at least ten Republicans would need to vote in favor.

4 hours ago - Politics & Policy

The Democrats' debt dilemma

Illustration: Aïda Amer/Axios

Democrats find themselves in a political and potentially catastrophic economic quagmire as Republicans stand firm on denying them any help in raising the federal debt ceiling.

Why it matters: The Democrats are technically right — the debt comes, in part, from past spending by President Trump and his predecessors, not only President Biden's new big-ticket programs. But Senate Minority Leader Mitch McConnell (R-Ky.) is saddling them with the public relations challenge of making that distinction during next year's crucial midterms.