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Illustration: Annelise Capossela/Axios

House lawmakers targeted SPACs during a hearing today following a year of unprecedented deal activity.

Why it matters: Congress may decide to draft new legislation that would take away one of the advantages of going public through SPACs versus a traditional IPO — the ability to make forward-looking statements.

  • The SEC has signaled it could do the same.

What they're saying: Stephen Deane of the CFA Institute testified that the safe harbor rule governing what you can say about the future is a “singular regulatory advantage” that SPACs have over IPOs.

  • Andrew Park of Americans for Financial Reform also testified that because SPACs are not subject to the same liabilities for making false and misleading forward-looking statements, the method has “emboldened” pre-revenue companies (electric vehicles, cryptocurrency, space exploration) to make “what might generously be called very rosy projections.” 
  • “What’s most concerning is that retail investors are buying into this kind of hype,” Park added.

By the numbers: The witnesses cited how much SPACs have underperformed their peers or the broad market.

  • Park pointed to a Goldman Sachs index of 200 SPACs that saw average losses of -17% compared to a 10% return in the S&P 500 this year.
  • Deane noted that for every year since 2010, the one-year post-merger performance of SPACs has underperformed the Russell 2000 by 10% or worse.

The big picture: Congress is concerned about protecting retail investors, a theme that has been present since the meme stock trades earlier this year.

What to watch: Even with the growing scrutiny, SPACs aren’t dead. They’ve just been slower coming to market given the existing backlog of reviews. 

Go deeper

Updated 1 hour ago - Science

NTSB probes crash that killed 10 in Alabama as storm lashes Southeast

Flash-flooding in Bloomington, Indiana, on Saturday. Photo: Jeremy Hogan/SOPA Images/LightRocket via Getty Images

The National Transportation Safety Board announced Sunday that it's investigating a fiery multi-vehicle weekend crash in Alabama that killed 10 people, including nine children, as storms swept the Southeast.

The big picture: Saturday's crash on Interstate 65, south of Montgomery, occurred amid a tropical depression that left 13 people dead in Alabama as it triggered flash floods and spawned tornadoes that razed "dozens of homes," per AP.

Laurel Hubbard to become 1st openly trans athlete to compete at Olympics

New Zealand's Laurel Hubbard at the Gold Coast 2018 Commonwealth Games in Australia, when she became the first openly transgender athlete to represent NZ. Photo: Scott Barbour/Getty Images

The New Zealand Olympic Committee has announced that Laurel Hubbard has been selected for the women's weightlifting team for the Tokyo Games — making her the first openly transgender athlete to compete at the event.

The big picture: Hubbard, 43, is part of a five-member Kiwi weightlifting team and will compete in the women's super heavyweight category. Meanwhile, BMX rider Chelsea Wolfe will become the first openly trans athlete to travel to the Olympics with Team USA, when she arrives in Tokyo as a reserve rider.

American Airlines cuts hundreds of flights amid demand surge

Photo: Joe Raedle/Getty Images

American Airlines announced Sunday that it's cutting some 950 flights from its schedule, including 296 this weekend, to reduce potential pressure on its operations, the Wall Street Journal first reported.

Driving the news: The U.S. vaccine rollout has led to a massive increase in travel bookings. The airline noted in an emailed statement that it's facing an "incredibly quick ramp up of customer demand."