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- Tesla chief Elon Musk said the SEC is sometimes “too close” to Wall Street hedge funds.
- He added that it’s strange the regulator isn’t cracking down more on the SPAC frenzy.
- The SEC is said to be exploring issuance of new guidance for blank-check companies.
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Billionaire Elon Musk said on Tuesday the US Securities and Exchange Commission plays an important role in monitoring risks for investors, but the regulator isn’t cracking down on the growth of blank-check companies.
“They have an important role to play in protecting the public from getting swindled, but are sometimes too close to Wall St hedge funds imo (in my opinion),” Musk said in a tweet. “Strange that they aren’t taking more action on some of the SPACs.”
Special-purpose acquisition companies, or SPACs, are listed on a stock exchange with the sole purpose of acquiring a private company to take it public without going through the traditional IPO process. Around $100 billion has already been raised across US SPACs so far this year, surpassing last year’s record $83 billion raised, according to SPACInsider.com.
The SEC is exploring the issuance of new guidance to control possibly exaggerated growth projections made by blank-check companies, Reuters reported, citing three sources. The new guidelines would also clarify when SPACs qualify for certain legal protections.
Earlier this month, the regulator issued a statement cautioning dealmakers in this market about the issues related to accounting, financial reporting, and governance that come with raising capital through SPACs. That followed the surge in SPACs globally this past year, even while economies are still weathering the impact of the coronavirus pandemic.
Musk himself has had to face the SEC with a securities fraud charge in 2018 that required him to step down as Tesla’s chairman. He reached a settlement with the regulator after tweeting that he had secured the funding required to take Tesla private. He had actually secured no such funding. That resulted in Musk and Tesla each paying $20 million in civil fines.
In a separate tweet on Tuesday, Musk said he agrees with the Federal Communications Commission, the National Highway Traffic Safety Administration, and the Federal Aviation Administration “99.9% of the time.”
“On rare occasions, we disagree. This is almost always due to new technologies that past regulations didn’t anticipate,” he added.
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