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by gizmo 1161 days ago
Should publicly listed companies should publish their financial results every quarter? Do they have to use GAAP or can they make up their own financial metrics? What do you think would happen if we removed the regulations surrounding financial disclosure for public companies?

The questions are rhetorical. Companies will rob their shareholders blind if you let them. You can't just be "lol caveat emptor".

(Casinos also cheated players shamelessly in the good old days before regulatory oversight.)
1 comments
fallingknife 1161 days ago
Yeah I can just like I am about all those other great ways to lose money that I just posted.

But, I'm really not getting your point here. SPACs have to report financial results just like any other public company. They aren't allowed to commit fraud any more than any other company.

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gizmo 1161 days ago
SPACs are basically an incorporated bag of money, so yes, while they technically have the same disclosure requirements as any other public company the disclosures won't tell you anything. There is no Form S-1 for SPAC acquisition targets.

A conventional IPO has a number of roadblocks for fraudsters. First they have to convince a reputable investment bank (like Goldman Sachs) to take them on as a client. Then the CEO and CFO of the company have to go on a grueling road show where they talk to groups of sophisticated investors, present their business prospects, and answer difficult questions. The IPO doesn't happen if those investors aren't willing to pay up, or if the investment bank feels like management is not transparent about their realistic business prospects.

With a SPAC you have none of that. You can have a slide deck and a webcast and make outrageous claims and nobody will call you out on it. The company and SPAC sponsor can dump their shares on retail investors who think they are investing alongside the executives and SPAC sponsor, when in reality they are their exit liquidity.

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fallingknife 1161 days ago
Do you have an example of a SPAC where the.target was a scam? I'm not aware of any, and I follow this stuff more closely than most people.
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gizmo 1161 days ago
Nikola Motor went from a 34bn market cap to near bankruptcy in 2 years. Their tech was a sham and the founder got prosecuted and convicted for defrauding investors.

Lordstown Motors. Faked their order book. Blatant securities fraud.

There are many others.

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