Famed investor Bill Ackman’s SPAC is getting sued because its detractors say it might not actually be a SPAC.

It’s the latest in a string of class-action lawsuits against the hyped blank check companies that help startups go public and could have wide-reaching impacts.   

• Ackman’s SPAC, Pershing Square Tontine Holdings, hasn’t acquired anything: And that’s, obviously, what SPACs are supposed to do. The closest it has come was a business deal with Universal Music Company, according to the lawsuit. The deal was not an acquisition and was eventually shelved by PSTH. 

• So what has PSTH been doing?: The lawsuit, from a former SEC commissioner and a Yale law prof, states the company has been investing in securities and little else. They say that should place PSTH under regulation of the Investment Company Act of 1940 and require greater legal oversight.    

This lawsuit could disrupt SPACs all over

Plenty of investment funds, similar to Ackman’s, have gotten involved in SPACs. They could all face more questions about their involvements, according to the NYT. 

The Verdict

IPOs via SPAC were already cooling off, and SPACs have been facing greater legal issues. Per CNBC, 15 lawsuits had been filed against SPACs as of early August, compared to five lawsuits in 2020.