A key U.S. House of Representative panel advanced legislation aimed at cracking down on special purpose acquisition companies, which has been one of the hottest markets on Wall Street in recent years, Bloomberg News reported. The House Financial Services Committee, chaired by Maxine Waters, cleared a proposal on Tuesday that would ban Wall Street from marketing blank-check companies to retail investors. Another bill that was approved would largely exclude SPACs from receiving a safe harbor that reduces their regulatory liability. SPACs, which are shell companies that list on public exchanges to raise money in order to buy profitable entities, are increasingly becoming a focus of lawmakers and regulators, including Securities and Exchange Commission Chair Gary Gensler. A top concern is that retail investors may be left holding the bag because so many SPACs have been started over the past few years that there may be few viable companies left for them to acquire. While the legislation faces long odds in the Senate, where Democrats hold a thin majority, any momentum on Capitol Hill could embolden regulators like Gensler to act. The SEC chair has laid out a list of dozens of rule proposals, including plans to increase disclosures for SPACs and corporate diversity.
