Ackman Mocks Suit vs His SPAC, Says It Doesn't Need Registration

Billionaire hedge fund manager William Ackman on Tuesday said his blank check company is not an investment firm that needs to register with U.S. regulators, pushing back against an investor's lawsuit that alleges that his Pershing Square Tontine Holdings has improperly invested in securities.

Photo Insert: William Ackman

"PSTH has never held investment securities that would require it to be registered under the Act, and does not intend to do so in the future," Ackman said in a statement, referring to the Investment Company Act of 1940 and the Investment Advisers Act of 1940, longstanding market regulatory laws.

"We believe this litigation is totally without merit," Ackman told Svea Herbst-Bayliss of Reuters.

The lawsuit contends that Ackman's special purpose acquisition company (SPAC) acted as an investment company all along rather than a SPAC that is exempt from the registration requirement.

The lawsuit was filed on Monday in US federal court in New York by George Assad, an investor in the SPAC. The suit states: "Investing in securities is basically the only thing that PSTH has ever done." SPACs are meant to merge with private companies and then take them public.

Ackman on Aug. 10 bought 7.1% of Universal Music Group (UMG) through his hedge funds from French conglomerate Vivendi and pledged to keep buying after his original plan to have his SPAC acquire a 10% stake in the record label for his blank-check company collapsed.

Ackman's SPAC initially announced the plan to buy 10% of Universal Music Group at a time when it already was being taken public by Vivendi. Ackman scrapped the SPAC deal in July, saying that his hedge funds and not the blank check company would now be making the investment in UMG amid growing concerns among regulators that the deal would not meet New York Stock Exchange rules.

WEEKLY FEATURE : PAL READY TO SOAR WITH PANDEMIC