US Securities and Exchange Commission (SEC) warned investors about celebrities’ involvement in special-purpose acquisition companies (SPACs).
“Just because someone famous is involved in a SPAC doesn’t mean it’s right for you,” the SEC’s Office of Investor Education and Advocacy wrote on Twitter. “Celebrities, like anyone else, can be lured into participating in a risky investment or may be better able to sustain the risk of loss. It is never a good idea to invest in a SPAC just because someone famous sponsors or invests in it or says it is a good investment.”
The warning from the market regulator came after several American celebrities announced involvement with SPACs. Former baseball player Alex Rodriguez and former American football player Colin Kaepernick announced plans for their own SPACs last month, while basketball legend Shaquille O’Neal and music mogul Jay-Z also have SPAC connections.
A SPAC, also known as a blank check company, is listed on a stock exchange to acquire a private company, but it is made public without going through the traditional initial public offering (IPO) processes that the SEC regulates.
Excelsa Acquisition, a blank check company targeting “Latin America Growth Industries,” filed with the SEC on Tuesday to raise up to $250 million in an IPO offering 25 million units at $10.
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