Loeb Joins U.S. Law Firms in Response to Investment Company Act Lawsuits Targeting the SPAC Industry

Loeb & Loeb has signed a joint statement, together with more than 55 of the nation’s top law firms, in response to derivative lawsuits initiated by a purported shareholder of certain special purpose acquisition companies (SPACs). The actions assert that the SPACs are investment companies under the Investment Company Act of 1940, because proceeds from their initial public offerings are invested in short-term treasuries and qualifying money market funds.

Loeb and the other undersigned law firms view the assertion that SPACs are investment companies as without factual or legal basis and believe that a SPAC is not an investment company under the 1940 Act if it: (i) follows its stated business plan of seeking to identify and engage in a business combination with one or more operating companies within a specified period of time; and (ii) holds short-term treasuries and qualifying money market funds in its trust account pending completion of its initial business combination.

Click here to read the full joint statement.