Activist investor Bill Ackman launched a special purpose acquisition company in early 2021, just as the concept was waning in popularity. Poor timing for him.
Now, his SPAC, Pershing Square Tontine Holdings, is under legal assault: A lawsuit charges that the Ackman vehicle should be regulated under the 1940 Investment Company Act, which would require it to disclose more and refrain from making public statements ahead of a transaction that might influence the market.
The action in federal court, by former SEC Commissioner Robert Jackson and Yale Law School Professor John Morley, is part of a slew of such suits attempting to rein in SPACs. Ackman has responded that Jackson and Morley are misreading the law.
The suits cite the Securities and Exchange Commission’s new proposed rule that would require SPACs to divulge more information about their investors and possible conflicts of interest.
The Ackman SPAC has had some trouble getting off the ground. Over the past year, it aimed to take a stake in Universal Music Group, as part of a spinoff from French conglomerate Vivendi. But the SEC axed that plan. It has been scrambling for another target, without much success.