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“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 SEC said. website The recent SPAC frenzy has attracted the attention of a number of mainstream celebrity figures such as rap star Jay-Z, tennis legend Serena Williams and National Basketball Association Hall of Famer Shaquille O’Neal who have either sponsored their own blank-check firms or joined the boards of other SPACs.
Special purpose acquisition companies, or SPACs, are shell companies which raise funds to acquire a private entity with the aim of taking it public, allowing such companies to sidestep a traditional IPO to enter public markets. Securities and Exchange Commission (SEC) cautioned investors on Wednesday about buying shares of so-called special purpose acquisition companies only because they are backed by celebrities, including movie stars and athletes.
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