Billionaire hedge fund manager Bill Ackman is being sued for not operating as a blank check company, the New York Times first reported Tuesday, a case that could affect the entire industry amid a boom over the next year.
Ackman’s Pershing Square Tontine Holdings has been the subject of a lawsuit filed through former SEC Commissioner Robert Jackson and Yale law professor John Morley.
Both argued that Ackman’s PSPC operates more like an investment fund than an operating company, similar to its hedging budget, meaning it will instead be regulated through the Investment Companies Act of 1940.
The lawsuit, filed in U. S. District Court. USA In Manhattan, he also highlighted arrest warrants, the right to acquire non-unusual shares at a safe value, which would be received by sponsors and administrators.
“This staggering redemption promised at a time when returns for the company’s public investors have performed particularly underperformed the rest of the stock market,” the complaint says.
Pershing Square postponed the lawsuit on Tuesday saying it had never held investment securities that required its registration in law, and has no plans to do so in the future.
“We believe this dispute is absolutely unfounded,” he said. The complaint bases its allegations, among other things, on the fact that the PSTH owns or has held U. S. Treasuries and the cash market budget that holds U. S. Treasuries, as all other SAVS are doing. while they are in the process of searching for a first business combination. “
A few days later, Ackman regretted his failed deal with the PSPC, but hinted that he already had election goals in mind.
PSPCs, shell corporations that point to merging with corporations and going public, have skyrocketed in popularity in recent years.
This approach is usually used in the position of an IPO or direct board and has been earned from both Wall Street heavyweights and pop icons and professional athletes.
Ackman, for his part, attempted to rewrite his PSPC regulations.
But given the frenzy around blank checklists, regulators have begun tightening the rules.
In 2020, a total of 248 PSPCs raised $83. 3 billion according to PSPC Analytics. By mid-2021, the knowledge already 412 SAVS that have raised $121 billion, or 53% of initial public offerings.
However, in recent months, a slight cooling has been noticed in the sizzling PSPC market as first-day trading peaks that were not unusual in the area prior to this year begin to evaporate.