SPACs go splat
Contributing columnist
The Washington Post
February 20, 2024 at 5:45 a.m. EST
Yet another Wall Street investment fad has crumbled, this time a dodgy technique for taking companies public called SPACs, or special purpose acquisition companies. As is often the case, regular investors and rank-and-file employees are the losers; hedge fund managers and investment bankers are the winners.
Not for the last time, regulators are stepping in to quash snake-oil schemes they didn’t do enough to stop when it might have made a difference.
It's worth taking note of this debacle now because it won’t be the last time Wall Street hustlers separate unsuspecting investors from their savings. It’s just the latest.
If you only started paying attention to SPACs a few years ago, you’d be forgiven for thinking they were a new financial elixir. In 2021, nearly 200 companies completed SPAC deals, up more than threefold from the year before. These deals were worth close to $500 billion, a fivefold increase.
But SPACs have been around for decades. Before a few years ago, however, only unsavory, little-known companies attempted to enter the public markets using this device. Continue reading here.