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A U.S. Securities and Exchange Commission (SEC) official on Thursday said the agency is reviewing filings and seeking clearer disclosures for special purpose acquisition companies (SPACs), and detailed concerns around fees, conflicts and sponsor compensation.

Staff at the top U.S. markets regulator “are reviewing these filings, seeking clearer disclosure, and providing guidance to registrants and the public,” John Coates, acting director of the SEC’s Division of Corporation Finance, said in a statement.

The SEC is stepping up scrutiny of the increasingly popular SPACs, shell companies that raise funds via a listing to acquire a private company with the purpose of taking it public.

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SPACs are seen as an easier alternative to the traditional initial public offering, with less regulatory scrutiny.

Coates detailed some of the SEC’s concerns about SPACs at an event earlier this week. The agency has also warned dealmakers to follow regulatory demands, and last month launched an inquiry into how underwriters are managing any risks.

Claims that SPACs present less exposure to liabilities are “overstated at best,” Coates said, an issue that has been called out by investor advocates and other critics.

Participants may not have considered the legal implications of making performance projections as part of the SPAC process, Coates said. Any material misstatements are a violation of securities laws, he said.

Coates raised the prospect of a formal rulemaking or potential legislative reform to address concerns, but stopped short of offering formal guidance or asking for public comment on the issue.

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