Legal Question in Securities Law in New York

Re: SPAC targeting a different industry

Remember that a SPAC is a blind pool, blank check shell whose sole purpose is to acquire an operating company. While the S-1 or other SEC filings may indicate an "intent" to acquire a business in a particular sector, they often contain broad language like:

"Our efforts to identify a prospective target business will not be limited to a particular industry or geographic location, although we intend to initially focus our efforts on acquiring an operating business in the trolley car industry because that is the only industry in which our management has any experience. However, it is possible that a potential transaction outside of the trolley car industry will come to the attention of our management .... If this were the case, we would not be restricted from pursuing such a transaction."

Also, the founding shareholders have to put the proposed acquisiton to a vote and usually require 80% approval. So if you put money into a SPAC expecting it to acquire a company in technology and it announces the acquisition of a hamburger joint, you can vote no and hope more than 20% of your fellow investors do so too. The actual language used in the disclosure would have to be read carefully to see if there is any affirmative misrepresentation or material omission.

If I were you and had a real concern, I would take the relevant documents to an experienced securities litigation attorney in your home state to determine if there is or is not a violation, and iof so, to determine your choices if the violation caused you to lose money. I provide this generalized response subject to the disclaimer on my website at www.GelberLaw.net, and particularly urge you to neither act nor refrain from acting based solely on the generalities I have noted here. My only advice is to sit down with a lawyer who can examine the specific details.