Lawyers Behind Ackman's Retreat May Target More SPACs

The lawyers whose action prompted billionaire investor William Ackman to make changes to his special purpose acquisition company (SPAC) could target more such vehicles, according to three people familiar with the matter, Svea Herbst-Bayliss, Anirban Sen, and Sierra Jackson reported for Reuters.

Photo Insert: Bill Ackman during a talk for the Harvard Association for Law and Business (HALB)

The group, which includes former US Securities and Exchange Commissioner Robert Jackson, filed lawsuits last week against three blank-check acquisition firms: GO Acquisition Corp., E.Merge Technology Acquisition Corp. and Ackman's Pershing Square Tontine Holdings.

The lawsuits accuse the SPACs of operating illegally by not registering as investment companies. Ackman last week said the lawsuit against his SPAC was without merit, but acknowledged that the legal uncertainty hanging over it would make it tougher to find a merger partner.

The three lawsuits were all filed on behalf of George Assad, a shareholder in the SPACs. He has been named as the plaintiff in at least 33 other shareholder lawsuits since 2010 against a range of companies, from oil and gas explorer Noble Energy to consumer credit bureau Equifax Inc, a search of legal databases shows.

The lawyers group, which includes law firms Susman Godfrey LLP and Bernstein Litowitz Berger & Grossmann LLP, one of the most prolific US shareholder class action firms, is actively monitoring the SPAC sector to identify potential issues at other SPACs, the sources said.

Two of the sources said the number of potential new lawsuits could end up being as high as 50. A third source, however, said this estimate was incorrect and that no new legal action was imminent.

While none of the group's lawsuits have had their day in court, they point to a rapidly escalating legal campaign against SPACs. These shell vehicles raise money in an initial public offering to pursue a merger with a private company. There are currently 438 SPACs, which, like those that were sued, have yet to clinch a merger, according to data from SPAC Research.

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