7: 2020 was undoubtedly the year of the special purpose acquisition

10: company, or Spacs, as we have come to know them.

14: These blank cheque companies, which

16: raise money on the stock market and then

18: search for private companies to take public,

20: have pulled in billions of dollars

22: from institutional and retail investors.

26: But as Spacs have proliferated they

28: have also attracted intense scrutiny from regulators.

31: Some of the best known companies to have gone public

34: through Spacs have faced investigations

36: from the Securities and Exchange Commission.

38: Among them are fantasy sports betting platform DraftKings,

42: one of the most successful Spac mergers to date,

45: as well as popular electric vehicle start-ups, Nikola

48: and Lordstown Motors.

50: At issue are some of the key features

52: that have made Spacs popular with early stage companies

55: looking to raise money for growth.

58: That includes the ability to show optimistic revenue

61: projections in investor marketing presentations,

64: as well as the fast track route to public markets, enabled

67: by Spacs, which have raised questions around due diligence.

71: Even Wall Street veterans, such as Bill Ackman,

74: have had a hard time navigating a tougher stance

76: from the regulator.

78: The billionaire was forced to scupper a deal to acquire a 10

81: per cent stake in Universal Music

83: through his Spac, following intervention from the SEC.

87: The first major SEC case came in July.

91: The regulator issued fines against Momentus,

93: a space transportation start-up, and Stable Road Acquisition,

97: the Spac it had struck a deal with, for misleading investors.

101: It marked the first crackdown of its kind

103: and sent a clear warning to Spac deal makers.

106: So where does this leave the Spac market?

109: The immediate effect is a significant slowdown

112: in both fundraising and deal making.

115: The long-term impact could be that a large majority

118: of the hundreds of Spacs currently searching

120: for companies will be forced to go back to their shareholders,

123: without a deal.