Don't Get Burned: Why the DE-SPAC Transaction Must Be Excluded From the PSLRA's Safe Harbor Provision For Forward-Looking Statements

This Comment argues that the de-SPAC transaction should be excluded from the PSLRA’s safe harbor for forward-looking statements because it functions as the practical equivalent of a traditional initial public offering. Although SPAC sponsors currently rely on the safe harbor to present financial projections that traditional IPO issuers generally cannot, the private operating companies entering the public markets through de-SPAC transactions often lack established reporting histories and performance records. The Comment contends that the economic realities of de-SPAC transactions, combined with sponsors’ incentives to complete mergers, create significant investor protection concerns and increase the risk of misleading projections. Because the de-SPAC transaction serves the same fundamental purpose as a traditional IPO, the Comment concludes that it should be treated similarly under federal securities law and excluded from the PSLRA’s safe harbor protections. [This abstract was written by Microsoft Copilot, a generative artificial intelligence.]