SEC warns against investing in SPACs based solely on celebrity backing

by | Mar 10, 2021 | In The News, IPOs, SPACs

Special purpose acquisition companies, or SPACs, are shell companies which raise funds to acquire a private entity with the aim of taking it public, allowing such companies to sidestep a traditional IPO to enter public markets.

The SEC said a celebrity endorsement of a SPAC does not necessarily make it a safe bet for investors. Celebrities, like others, can be enticed into a risky investment, but they may be better able to sustain the risk of losses, the securities regulator added.

“It is never a good idea to invest in a SPAC just because someone famous sponsors or invests in it or says it is a good investment,” the SEC said. (https://

The recent SPAC frenzy has attracted the attention of a number of mainstream celebrity figures such as rap star Jay-Z, tennis legend Serena Williams (NYSE:WMB) and National Basketball Association Hall of Famer Shaquille O’Neal who have either sponsored their own blank-check firms or joined the boards of other SPACs.

This is an excerpt of a post published on on INVESTING.COM

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