US law firms respond en masse to SPAC litigation

Winston & Strawn was one of forty-nine U.S. law firms that, on Friday, 8/27 issued a joint response in support of special purpose acquisition companies and regulatory exemptions that allow them to avoid being treated as investment advisers.

The move follows a wave of recent lawsuits brought against SPACs that seeks to regulate them as investment advisers under the Investment Company Act of 1940, a post-Depression law designed to cap fees charged by mutual funds, hedge funds, ETFs and other investment advisers.

One key question of the litigation is whether the SPACs’ primary business was investing in securities. And importantly, according to Winston & Strawn securities litigator Jeffrey Steinfeld, whether the SPACs led investors to believe their principal activity was trading and investing in securities, through regulatory disclosure and other communications to stockholders.

Read Jeffrey's insights in International Finance Review here. 

View the joint response here. 

View Winton & Strawn’s further analysis here.