Last week, a stockholder in three special purpose acquisition companies (“SPACs”—Pershing Square Tontine Holdings, Ltd. (“PSTH”), GO Acquisition Corp. and E.Merge Technology Acquisition Corp) brought novel claims against each SPAC, its sponsor and directors. [1] The suits claim that each SPAC is an unregistered investment company and that the compensation paid by the SPAC to its sponsor and its directors (notably the founder shares and warrants, or comparable interests in the case of PSTH) was illegal and void under the Investment Company Act of 1940 (the “Act”). [2] The suits have received a fair amount of press, in part because PSTH and its attempted investment in Universal Media Group (“UMG”) are high profile, and in part because two of the lawyers representing the plaintiff in the suit are Robert J. Jackson, Jr., an NYU law professor and former Securities and Exchange Commission (“SEC”) commissioner (who served in that role roughly two years from January 2018 to February 2020), and John Morley, a Yale Law professor.

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